**U.S. Dollar Retreats as Consumer Confidence Weakens — In-depth Analysis of EUR/USD, GBP/USD, USD/CAD, and USD/JPY Trends**
*Original article by Vladimir Zernov via FXEmpire, rewritten and expanded with additional analysis.*
The U.S. dollar weakened recently following the release of a disappointing Consumer Confidence Index, measured by the Conference Board. The index dropped to 94.6 in June, significantly missing analysts’ expectations of a reading near 100.0. This unexpected decline highlighted growing concerns among American consumers regarding inflation, job security, and future economic conditions. Consequently, the greenback lost ground against a basket of major currencies, as investors braced for potential shifts in Federal Reserve policy direction.
This article provides an in-depth overview of how the U.S. dollar reacted across key currency pairs, including EUR/USD, GBP/USD, USD/CAD, and USD/JPY, incorporating technical forecasts and broader macroeconomic context.
## U.S. Consumer Confidence Declines: A Catalyst for Dollar Weakness
On June 25, 2024, the Conference Board revealed that its Consumer Confidence Index fell to 94.6 in June, from 101.3 in May. This is the lowest reading since late 2022 and signals deteriorating consumer optimism amid persistent inflation concerns and political uncertainty ahead of the upcoming U.S. election.
The sub-indices for both the Present Situation and Expectations also declined:
– Present Situation Index fell to 132.1 from 140.4
– Expectations Index dropped to 65.5 from 74.9 (a value under 80 historically indicates recession concerns)
Key takeaways:
– Weak consumer confidence could signal slowing consumer spending, a key driver of the U.S. economy
– The data adds pressure on the Federal Reserve to consider the economic implications of maintaining higher interest rates
– The dollar’s decline suggests traders are recalibrating their expectations for the Fed’s rate hike trajectory
Following the release, the U.S. Dollar Index (DXY), which measures the greenback’s strength against six major currencies, dropped to 105.70 from intraday highs above 106.20.
Now let’s explore how this development affected the major currency pairs.
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## EUR/USD: Euro Gains as Sentiment Favors Risk Assets
Following the Consumer Confidence release, EUR/USD extended its rally, reaching a session high of around 1.0730. The pair has been in an upward trend since touching 1.0660 earlier in the week, driven partly by a general risk-on move and weakening demand for the dollar.
**Technical Analysis:**
– Support: 1.0670 to 1.0685 — a range that previously acted as a consolidation zone
– Resistance: 1.0735 to 1.0755 — area tested post-consumer sentiment release
– RSI (Relative Strength Index): Moving into neutral territory near 50, suggesting more upside is possible without signaling an overbought condition
– 50-day EMA: Around 1.0710, now likely acting as support
– 200-day EMA: Just under 1.0800; this level remains a strong resistance zone longer term
**Fundamental Drivers:**
– The European Central Bank (ECB) indicated earlier in June that it could pause after one rate cut, implying limited divergence with the Fed
– Eurozone inflation, while easing, remains sticky around 2.5% to 3.0%, keeping monetary policymakers alert
– The euro is benefiting from a stabilizing German economy and improving manufacturing PMI surveys across the Eurozone
**Outlook:**
If EUR/USD breaks convincingly above 1.0755, the next target is 1.0800 to 1.0820. A failure to do so may see the pair retesting support near 1.0700.
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## GBP/USD: British Pound Continues to Build Momentum
The British pound mirrored
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