How To Trade The US Consumer Sentiment With EUR/USD

This article originally appeared on FXStreet.

• The UoM Consumer Sentiment Index is an early indicator of potential spending and has a significant impact on markets.
• The Market Impact Tool shows trading opportunities in both upside and downside surprises on this event.
• The EUR/USD moved, on average, 16 pips in the 15 minutes after the data release and 48 pips in the next 4 hours.

Buying EUR/USD Scenario

• Tradable Negative Trigger: -1.79 deviation (95.03) [BUY Pair]
• Key Resistance Level: $1.2000

If it comes out lower than expected at a relative deviation of -1.79 or less (95.03 or lower in actual terms), the EUR/USD may go up reaching a range of 21 pips in the first 15 minutes and 53 pips in the following 4 hours.

The round psychological level of $1.2000 looms above. Higher, $1.2055 was the low point on April 30th and could cap the pair. The 2017 peak of $1.2090 is next.

Selling EUR/USD Scenario

• Tradable Positive Trigger: +1.25 deviation (102.60) [SELL Pair]
• Key Support Level: $1.1822

If it comes out at higher than expected with a relative deviation of +1.25 or higher (102.60 or higher in actual terms), the pair may go down reaching a range of 20 pips in the first 15 minutes and 67 pips in the following 4 hours. 

$1.1915 was the January low. $1.1822 is the new 2018 bottom. Even lower, $1.1710 is the next target.

EUR/USD Levels on the Chart

More data

Consumer sentiment is correlated with spending by consumers. The indicator is for the current month of May, shedding some light on intentions of shoppers to spend this month. In addition, it factors inflation expectations which the Fed cares about. 

In the last five releases, the EUR/USD moved, on average, 16 pips in the 15 minutes after the data release and 48 pips in the next 4 hours.

The previous release had a surprise of +0.32 in terms of relative deviation and the EUR/USD reached a 17 pip range in the first 15 minutes and a range of 45 pips 4 hours thereafter.

Follow the publication of the figure on the economic calendar. Watch out for the data from the Market Impact tool, projecting the potential price changes according to the deviation. Here is the Market Impact Studies Users Guide.