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09.07.2025 10:43 AM
Consumer lending in the US is slowing down

According to data, consumer lending in the U.S. grew at its slowest pace in three months in May amid a decline in outstanding balances on credit cards and other revolving debt.

Figures released Tuesday by the Federal Reserve showed that total outstanding consumer credit rose by 5.1 billion dollars after a revised increase of 16.9 billion dollars in April. The average economist forecast had called for a rise of 10.5 billion dollars.

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Outstanding balances on credit cards and other revolving credit fell by 3.5 billion dollars, marking the first decline since November. Non-revolving credit, which includes loans for car purchases and education, increased by 8.6 billion dollars, a slight deceleration compared to the previous month.

The slowdown in borrowing coincides with a decline in household spending during the month. Rising concerns about the economy and the labor market in recent months may also be prompting consumers to act more cautiously with their finances and become less inclined to take on debt. This trend toward financial caution likely reflects the broader uncertainty currently prevailing in the economy. Issues surrounding inflation, interest rates, and geopolitical stability are weighing on consumers, pushing them to reassess their financial priorities. In such conditions, it is reasonable to expect that people will be more inclined to delay major purchases and reduce their debt to strengthen their financial position.

However, reduced consumer spending could have negative consequences for economic growth. Consumer spending is one of the main drivers of the economy, and a decline in its volume could lead to slower economic growth and an increased risk of recession.

Federal Reserve policymakers recently stated that they will keep interest rates at current levels until meaningful progress is made in bringing inflation down, which presents another hurdle for Americans carrying large credit card debts. The Fed report noted that the average interest rate on credit cards with assessed interest stood at 22.25% as of May—close to the highest level since 1995.

As for the current EUR/USD technical picture, buyers now need to focus on reclaiming the 1.1740 level. Only this will open the path to testing 1.1790. From there, the pair could push toward 1.1825, though reaching that level without support from large market participants may be difficult. The most distant target is the 1.1866 level. In the event of a decline, significant buyer interest is expected only around the 1.1690 level. If no support is found there, it would be preferable to wait for a retest of the 1.1650 low or consider opening long positions from 1.1620.

Regarding the current GBP/USD technical outlook, pound buyers need to overcome the nearest resistance at 1.3605. Only this will allow for a move toward 1.3640, above which further progress could be challenging. The most distant target is the 1.3680 level. If the pair declines, bears will attempt to take control of the 1.3560 level. If successful, a break below that range would deal a serious blow to bullish positions and push GBP/USD down to the 1.3530 low, with the potential to reach 1.3490.

Jakub Novak,
Analytical expert of InstaForex
© 2007-2025
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