When is US PCE Price Index and how could it affect EUR/USD?

US PCE Price Index Overview

Thursday's US economic docket highlights the release of the November Personal Consumption Expenditure (PCE) Price Index, scheduled later during the early North American session at 13:30 GMT. The headline gauge is expected to match the previous month's reading and hold steady at 0.6%, while the yearly rate is seen rising to 5.6% from 5% in October. The core reading is forecast to come in at 0.4% in November and jump 4.5% YoY from 4.1% in October.

Being the Fed's preferred measure of inflation, the PCE Price Index will draw the market attention. Investors will also look out for any signs of a slowdown in spending amid the continuous rise in prices. This, in turn, will influence expectations about an eventual Fed liftoff and infuse some volatility in the markets.

How Could it Affect EUR/USD?

A strong than expected reading will boost bets for a possible Fed rate hike move in March and push the US dollar higher. Conversely, a big miss – though seems unlikely – would be enough to exert some additional pressure on the greenback, which, recently has been weighed down by the risk-on mood in the markets. That said, any immediate market reaction could turn out to be short-lived amid relatively thin liquidity conditions heading into the year-end holiday season.

Meanwhile, Eren Sengezer, Editor at FXStreet, offered a brief technical outlook for the major: “EUR/USD is trading above the 200-period SMA on the four-hour chart for the first time since late October. Additionally, the Relative Strength Index (RSI) indicator on the same chart is staying below 70, suggesting that the pair has more room on the upside before it becomes technically overbought.”

Eren also outlined important technical levels to trade the EUR/USD pair: “1.1360 (post-ECB high) aligns as the first technical resistance before 1.1380 (Nov. 30 high) and 1.1400 (psychological level). On the downside, additional corrective losses toward 1.1300 (psychological level, 100-period SMA) and 1.1280 (50-period SMA) could be witnessed if a four-hour candle closes below 1.1320 (200-period SMA).”

Key Notes

  •   EUR/USD Forecast: Additional recovery gains likely if 1.1320 support holds

  •   EUR/USD: Risk reversal jumps the most in two weeks

  •   EUR/USD: Risk stays seen lower for another test of 1.12 – Scotiabank

About the US PCE Price Index

The Personal Spending released by the Bureau of Economic Analysis, Department of Commerce is an indicator that measures the total expenditure by individuals. The level of spending can be used as an indicator of consumer optimism. It is also considered as a measure of economic growth: While Personal spending stimulates inflationary pressures, it could lead to raise interest rates. A high reading is positive (or Bullish) for the USD.