EUR/USD: Trading the Pending Home Sales May 26 2011


The last major economic indicator for the week is a very volatile one and will add action to the jittery markets at this time of the week. Here are all the details, and 5 possible outcomes for EUR/USD.

Published Friday, 14:00 GMT.

Indicator Background

The housing sector is lagging behind, with falling home prices and relatively low activity in recent months. This sector boomed before the crisis, and was a major player in bringing the world down.

The figure represents the change in the number of property deals that still haven’t been materialized – homes in the pipeline. This figure is quite volatile, with changes of over 10% being not too uncommon.

After two months of surprisingly strong rises (5.1% last month), there are expectations for a correction now: a drop of 0.9%. On the other hand, the strong rise in New Home Sales earlier in the week is somewhat encouraging and makes room for a surprise in pending home sales as well.

Sentiment and Levels

The fears around Greece have been strong  in the past few weeks and weighed heavily on the pair and make the sentiment bearish. But, there’s some fatigue about these news, and the pair has stabilized in a range, making it a good candidate to trade this event, contrary to earlier in the week, when external news had a stronger impact.

Note that the past few Fridays haven’t smiled on the pair.

Technical levels, from top to bottom: 1.4375, 1.4282, 1.4160, 1.4120, 1.4030, 1.3950 and 1.3860.

5 Scenarios

  1. Within expectations: -2% to 0%: (note the wide range) – in this case, EUR/USD shakes and can rise within range.
  2. Below expectations: -5% to -2%: In case of a larger fall, still within normal moves seen in previous months, the pair is likely to rise, with some chance of breaking resistance.
  3. Well below expectations: -5% or worse: Bad news for the US housing sector make a breakout quite likely, and the pair can settle at higher range towards the end of the week.
  4. Above expectations: +0.1% to +3%: A third month of rises will cheer the dollar. The pair is likely to break below support.
  5. Well above expectations: 3% or more: Will this scenario doesn’t look likely, a combination of Friday fears in the Euro with an excellent figure in the US can send the pair below two levels.

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

Get the 5 most predictable currency pairs

About Author

Yohay Elam – Founder, Writer and Editor I have been into forex trading for over 5 years, and I share the experience that I have and the knowledge that I’ve accumulated. After taking a short course about forex. Like many forex traders, I’ve earned the significant share of my knowledge the hard way. Macroeconomics, the impact of news on the ever-moving currency markets and trading psychology have always fascinated me. Before founding Forex Crunch, I’ve worked as a programmer in various hi-tech companies. I have a B. Sc. in Computer Science from Ben Gurion University. Given this background, forex software has a relatively bigger share in the posts.


  1. T Ighodaro on

    I enjoyed your forecast and it is very likely to be correct, I will keep my eye on the EUR/USD tomorrow.

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