Consumer sentiment validation approaches: What's next for the US dollar?
2025-09-12 21:54:10
The University of Michigan's preliminary September consumer confidence figures will be released on Friday (September 12th) in North American trading. The US dollar index fluctuated around 97.70, briefly reaching 97.8560 before retreating. With the combination of revised employment figures, rising initial claims, and moderate inflation, interest rate expectations continue to tilt toward easing.
The University of Michigan's monthly survey covers residents' assessments of their personal finances, business conditions, and durable goods purchasing plans. Based on the initial September reading, the consensus is that consumer confidence will decline further to 58.0 from 58.2 in August, continuing its downward trend from 61.7 in July. Five-year inflation expectations rose to 3.5% in August, up from 3.4% in July.
Earlier this week, the U.S. Bureau of Labor Statistics revised its non-farm payrolls for April 2024 to March 2025, with a preliminary reading of -911,000, approximately 0.6% lower than previously reported. The subsequent increase in initial jobless claims for the same week, combined with a modest rebound in August prices, reinforced the consensus for a September rate cut, further pricing in one or two more rate cuts this year. If sentiment readings continue to weaken today, it would align with the aforementioned cues, pointing to a marginal weakening in consumer momentum and putting temporary pressure on the US dollar.
The 10-minute candlestick chart shows the upper Bollinger Band at 97.8253, the lower Bollinger Band at 97.5865, and the middle Bollinger Band at 97.7059. The latest price is hovering around 97.75, a slight pullback from the previous peak at 97.8560, but still trading at a high level near the upper band. The band is showing signs of convergence after its earlier expansion, suggesting the short-term uptrend is entering a cycle of consolidation, retesting, and re-selecting a new direction. If the price continues to slide below the upper band without effectively breaking through 97.8253, it would be considered a pullback to the middle band after resistance at the upper band, with 97.7059 becoming the primary dynamic support level. If the price breaks below the middle band and the band opens again, 97.5865 and even lower, 97.4719 (the recent low), would form the key support band below. On the contrary, if it quickly returns to and stabilizes above 97.8253, accompanied by a long-term positive trend with large volume, it will have the opportunity to form another impact on 97.8560, or even interpret a "volume breakthrough" on the upper edge.
The MACD indicator shows a DIFF of 0.0292, a DEA of 0.0279, and a MACD-Histogram of 0.0025. The fast and slow lines remain above the zero axis, but the bars are beginning to shorten, suggesting a shift in momentum from "strong amplification" to "high-level blunting." The Relative Strength Index (RSI) reading is around 55.2838, in neutral to bullish territory and not yet overbought. Combined with the Bollinger Bands structure, this can be interpreted as "the trend is intact, but requires a price breakout to generate new strength."
Short-term scenario: If today's preliminary consumer confidence reading weakens significantly below 58.0 and inflation expectations don't fall, the US dollar could follow a trajectory of "failed upward push, retested the middle band, and then tested the lower band." Watch for a breakout of the support levels of 97.7059 and 97.5865. A break below this level could lead to a retest of 97.4719. If the data is only slightly weaker or shows structural divergence (e.g., a decline in the current situation component while improving expectations), the US dollar could continue to oscillate within the Bollinger Bands, with 97.8253 and 97.5865 forming the upper and lower boundaries.
Converse Scenario: If the initial consumer confidence reading significantly beats expectations, shifting the narrative from "slowdown" to "rebounding resilience," coupled with a decline in five-year inflation expectations and doubts about the path of a September rate cut, the dollar could quickly break through 97.8253 and head towards 97.8560. Once this level is broken and retested to confirm resistance turning into support, 97.8253 could serve as a watershed for a bullish re-start. However, it's important to emphasize that until the downward revision in employment is reversed, any rebound is more likely to be a "technical rebound" than a trend reversal.
Fundamentals
The University of Michigan's monthly survey covers residents' assessments of their personal finances, business conditions, and durable goods purchasing plans. Based on the initial September reading, the consensus is that consumer confidence will decline further to 58.0 from 58.2 in August, continuing its downward trend from 61.7 in July. Five-year inflation expectations rose to 3.5% in August, up from 3.4% in July.
Earlier this week, the U.S. Bureau of Labor Statistics revised its non-farm payrolls for April 2024 to March 2025, with a preliminary reading of -911,000, approximately 0.6% lower than previously reported. The subsequent increase in initial jobless claims for the same week, combined with a modest rebound in August prices, reinforced the consensus for a September rate cut, further pricing in one or two more rate cuts this year. If sentiment readings continue to weaken today, it would align with the aforementioned cues, pointing to a marginal weakening in consumer momentum and putting temporary pressure on the US dollar.
Technical aspects:
The 10-minute candlestick chart shows the upper Bollinger Band at 97.8253, the lower Bollinger Band at 97.5865, and the middle Bollinger Band at 97.7059. The latest price is hovering around 97.75, a slight pullback from the previous peak at 97.8560, but still trading at a high level near the upper band. The band is showing signs of convergence after its earlier expansion, suggesting the short-term uptrend is entering a cycle of consolidation, retesting, and re-selecting a new direction. If the price continues to slide below the upper band without effectively breaking through 97.8253, it would be considered a pullback to the middle band after resistance at the upper band, with 97.7059 becoming the primary dynamic support level. If the price breaks below the middle band and the band opens again, 97.5865 and even lower, 97.4719 (the recent low), would form the key support band below. On the contrary, if it quickly returns to and stabilizes above 97.8253, accompanied by a long-term positive trend with large volume, it will have the opportunity to form another impact on 97.8560, or even interpret a "volume breakthrough" on the upper edge.
The MACD indicator shows a DIFF of 0.0292, a DEA of 0.0279, and a MACD-Histogram of 0.0025. The fast and slow lines remain above the zero axis, but the bars are beginning to shorten, suggesting a shift in momentum from "strong amplification" to "high-level blunting." The Relative Strength Index (RSI) reading is around 55.2838, in neutral to bullish territory and not yet overbought. Combined with the Bollinger Bands structure, this can be interpreted as "the trend is intact, but requires a price breakout to generate new strength."
Market Outlook
Short-term scenario: If today's preliminary consumer confidence reading weakens significantly below 58.0 and inflation expectations don't fall, the US dollar could follow a trajectory of "failed upward push, retested the middle band, and then tested the lower band." Watch for a breakout of the support levels of 97.7059 and 97.5865. A break below this level could lead to a retest of 97.4719. If the data is only slightly weaker or shows structural divergence (e.g., a decline in the current situation component while improving expectations), the US dollar could continue to oscillate within the Bollinger Bands, with 97.8253 and 97.5865 forming the upper and lower boundaries.
Converse Scenario: If the initial consumer confidence reading significantly beats expectations, shifting the narrative from "slowdown" to "rebounding resilience," coupled with a decline in five-year inflation expectations and doubts about the path of a September rate cut, the dollar could quickly break through 97.8253 and head towards 97.8560. Once this level is broken and retested to confirm resistance turning into support, 97.8253 could serve as a watershed for a bullish re-start. However, it's important to emphasize that until the downward revision in employment is reversed, any rebound is more likely to be a "technical rebound" than a trend reversal.
- Risk Warning and Disclaimer
- The market involves risk, and trading may not be suitable for all investors. This article is for reference only and does not constitute personal investment advice, nor does it take into account certain users’ specific investment objectives, financial situation, or other needs. Any investment decisions made based on this information are at your own risk.
