The Consumer’s Summer Spending Surge
The desk sees a robust consumer spending outlook in the U.S. as a pivotal factor influencing economic activity and, by extension, forex markets. Per the full note from BofA Global Research, June marked the strongest growth in spending in four years, driven by factors such as the upcoming FIFA World Cup and rising disposable income among lower-income households. This resilience is critical as markets gauge consumer health, especially with the potential for inflationary pressures to taper as spending outpaces wage growth. Currently, consensus views among major banks reflect some divergence, highlighting differing expectations for currency pairs that may be sensitive to these consumer dynamics.
What the desk is arguing
The desk interprets the recent surge in U.S. consumer spending as a key bullish indicator for the economy and a potential catalyst for dollar strength against other currencies. According to insights from BofA, the growth observed in June can be attributed to factors like increased discretionary spending, improved financial conditions among lower-income consumers, and the anticipation surrounding the 2026 FIFA World Cup.
Supporting this view is the analysis from David Tinsley, who notes not just the recovery in spending but also a narrowing of the K-shaped recovery trend, indicating a more uniform economic recovery across income brackets. This suggests better-than-expected resilience of the consumer market, especially as job switching increases and wage growth accelerates for lower-income households.
Where it sits in our coverage
Our consensus target for the EUR/USD pair is set at 1.075, with a range spanning from 1.04 to 1.12. Key firms backing this forecast include: - jpmorgan: Targetting 1.10 by Mar 26 - bofa: Assuming a contrary stance with a lower target of 1.04 for the same tenor.
Currently, the desk’s outlook sits toward the upper end of this range, reflecting a bullish sentiment that contrasts with bofa's more cautious expectations.
How other firms see it
jpmorgan and others are aligned in their optimism toward the greenback in light of consumer trends, whereas bofa expresses skepticism, indicating a nuanced market landscape where these views diverge significantly.
The trajectory of the USD/EUR remains a focal point here, especially given the recent consumer data releases, suggesting that rate path decisions by central banks could significantly influence this pair's movement in the coming months.
How firms align with this view
Aligned with the desk view
Contrary positioning
Key takeaways
- 01U.S. consumer spending grew at its fastest pace in four years as of June.
- 02A significant factor in this growth is enhanced income among lower-income households, indicating a potential narrowing of the K-shaped recovery.
- 03Expectations around the FIFA World Cup are contributing to a rebound in discretionary spending.
- 04Market sentiment reflects divergence, with firms like BofA cautious against a backdrop of strong consumer data.
Market implications
Traders should monitor the USD/EUR pair closely, particularly for movements around the 1.075 level as economic data continues to come in strong. Any shifts in central bank policy or consumer spending sentiment may further influence the trajectory of the dollar against the euro.
Risks to this view
A potential reversal of this bullish outlook could occur if consumer spending does not maintain its momentum, particularly if inflationary pressures erode disposable income. Additionally, unexpected rate hikes from the Federal Reserve or a sudden downturn in labor markets could shift sentiment dramatically.
U.S. consumers showed remarkable resilience in June, with spending growth reaching its strongest pace in four years. But what's driving the surge, and can it last? In this episode of Global Research Unlocked, T.J.
Thornton speaks with David Tinsley, Senior Economist at the Bank of America Institute, about the latest Consumer Checkpoint data. They unpack the factors behind June's spending acceleration, including the impact of the 2026 FIFA World Cup, a rebound in discretionary purchases, and improving momentum among lower-income households. The conversation explores a notable shift in the consumer landscape: the long-running K-shaped spending trend appears to be narrowing.
David discusses why wage growth is accelerating for lower-income consumers, how increased job switching and a stronger labor market may be supporting household finances, and whether these improvements are likely to persist into the second half of the year. They also examine spending patterns across World Cup host cities, the return of strength in retail categories, and the risks facing consumers as temporary tailwinds fade and spending continues to outpace wage growth. "Bank of America" and “BofA Securities” are the marketing names for the global banking businesses and global markets businesses (which includes BofA Global Research) of Bank of America Corporation. Lending, derivatives, and other commercial banking activities are performed globally by banking affiliates of Bank of America Corporation, including Bank of America, N.A., Member FDIC.
Securities, trading, research, strategic advisory, and other investment banking and markets activities are performed globally by affiliates of Bank of America Corporation, including, in the United States, BofA Securities, Inc. a registered broker-dealer and Member of FINRA and SIPC, and, in other jurisdictions, by locally registered entities. ©2026 Bank of America Corporation. All rights reserved.
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