The US dollar declined against the euro and the pound, despite the fact that American consumers continued to increase their spending in February and March of this year, which will favorably affect the pace of economic growth. The increase in spending is directly linked to household confidence in their economic prospects.
According to the US Department of Commerce, personal household spending rose 0.1% in February this year, while in March the growth was just a little bit below the level of 1.0% and amounted to 0.9% compared to the previous month. Let me remind you that the data for February were not published in March due to the suspension of government work earlier this year.
However, not everything is as good as it seems at first glance. Despite rising costs, Americans' personal incomes in March rose by only 0.1% compared with the previous month, after rising 0.2% in February. Weak income growth, along with low unemployment, could have a negative impact on sentiment in the future. Personal savings of Americans increased in February by 7.3% but decreased in March by 6.5%.
The price index for personal consumption expenditures in the US rose by 0.2% in March and by 1.5% compared to the same period in 2018.
The speech of the US Treasury Secretary Mnuchin, which took place on Monday evening, did not make serious changes in the market situation.
The head of the Ministry of Finance said that the Trump administration policy contributed to GDP growth of 3.2% in the first quarter of this year, and that strong growth in the US economy is expected to continue over the next year. Mnuchin also noted that the slowdown of the European economy will have a modest impact on the US economy, as a trade agreement with China may be concluded in the coming weeks.
The Minister of Finance also said in an interview that last week, there was a meeting with representatives of the Japanese authorities on trade issues. The White House wants Japanese markets to be open to American agricultural products. Most likely, another trade conflict is brewing, but much will depend on the reaction of the Japanese authorities.
As for the technical picture of the EURUSD pair, further growth may be limited by the resistance of 1.1205 in the next few days. The bullish correction will continue only if there are good reports on inflation in Germany and GDP growth in the Eurozone in the 1st quarter of this year. The breakthrough of resistance 1.1205 will open a direct way to buyers of risky assets in the area of 1.1240 and 1.1280. If the data turns out to be worse than economists' forecasts, and it has been repeatedly said that the growth rate of the European economy is slowing again, then it is likely that the pressure on EURUSD will return, and the decline under the support of 1.1170 will bring back speculative sellers actively pushing the euro down to a minimum of 1.1115.
The material has been provided by InstaForex Company - www.instaforex.com