EUR/USD: Trading the Existing Home Sales

EUR/USD: Trading the Existing Home Sales

Existing  Home Sales report is a leading indicator of housing activity. The indicator is released on a monthly basis, and helps analysts track consumer spending. A higher reading than that expected by the market is bullish for the dollar.

Here are all the details, and 5 possible outcomes for EUR/USD.

Published on Friday at 14:00 GMT.

Indicator Background

The Existing Homes Sales Report measures the number of new single-family homes sold the previous month. An increase in home sales sends a strong signal of consumer spending and confidence in the economy.

The  indicator  jumped to  5.33  million in  March, beating the estimate of  5.29 million. The markets are  expecting the upward swing to continue, with  the  April  estimate standing at 5.40 million. Will the indicator match or beat  this prediction?

Sentiments and levels

The  Fed minutes were surprisingly hawkish and the US dollar  has responded with sharp gains against the euro. As well, the euro no longer enjoys a safe haven status and feels the weight of the greenback.  So, the sentiment is  bearish on EUR/USD towards this release.

Technical levels, from top to bottom: 1.1375, 1.1325, 1.1220, 1.1140, 1.1070 and 1.10

5 Scenarios    

  1. Within expectations: 5.36M to 5.44M: In such a case, EUR/USD is likely to move within range, with a small chance of breaking higher.
  2. Above expectations:  5.45M to 5.50M: An unexpected higher reading can push EUR/USD below one support level.
  3. Well above expectations: Above 5.50M: A sharp increase could push the pair below  a second support level.
  4. Below expectations:  5.30M to 5.35M: A reading lower than forecast could send EUR/USD above one resistance level.
  5. Well below expectations: Below 5.30M: A  very soft reading  would signal weakness in the housing sector. In such an outcome, the pair could break  through a second  resistance level.

For more on the euro, see the EUR/USD forecast.

Kenny Fisher

Kenny Fisher

Kenny Fisher - Senior Writer A native of Toronto, Canada, Kenneth worked for seven years in the marketing and trading departments at Bendix, a foreign exchange company in Toronto. Kenneth is also a lawyer, and has extensive experience as an editor and writer.