EUR/USD: will the USD confirm positive job market prospects?

The U.S. consumer will be the focus of attention in the coming months as the federal boost to unemployment benefits ends this month. Still, the economic outlook looks bright, especially considering the $2.4 trillion in household savings.

September has barely begun and some investors are already worried about the withdrawal of unemployment benefits this month. For the rest of the year and the year ahead, it all comes down to the American consumer and their willingness to spend the $2.4 trillion in savings accumulated during the virus months.

It is likely that the consumer will start spending. As a result, the U.S. economy is expected to grow more than 5.9% in 2021 and nearly 3.8% in 2022.

The elimination of unemployment benefits may look like fiscal tightening, but the fiscal conditions remain flexible. First, the Federal Reserve is unlikely to raise the federal reserve funds rate until the second half of 2023. It is currently holding it at the lower bound, near zero.

Second, the $3.6 trillion infrastructure plan will keep financial conditions loose for years to come. As a result, U.S. economic growth will likely be revised upward rather than downward. Either way, the economy is growing at the fastest rate in the developed world - literally booming.

What will the US dollar do?

It is said that the currency reflects the strength or weakness of the economy. That's why currency traders monitor economic data and make trades based on their interpretation of the economy's progress.

Despite the recent weakness of the greenback, as seen in the EUR/USD or AUD/USD pair which has rebounded a few hundred points from its recent lows, the US dollar reflects the booming economic conditions in America.

Of course, divergences exist. But a close look at what has happened in 2021 in the currency market tells us one thing and one thing only: the greenback has outperformed its peers, just as the U.S. economy has outperformed its rivals.

One question remains: will this trend continue for the rest of the trading year?