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The  Existing Home Sales indicator is released monthly, and provides analysts with important data about  consumer demand in the housing sector. A reading  which is higher than  the market prediction is bullish for the dollar.

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

Published on Wednesday at 14:00 GMT.

Indicator Background

The Existing Homes Sales Report provides analysts and investors with a snapshot of the strength of the US housing market, one of the most important sectors of the economy.    As a house is likely to be the largest purchase that a consumer will make, this indicator  helps measure  consumer  spending and confidence  in the US economy.

The  February reading for  the indicator came in at 4.57M,  slightly lower than the market forecast of 4.66M. The market forecast for March  calls for a slight improvement, up to 4.61M. These figures are well down from the September 2011 reading of 5.03M, indicating some weakness in the US housing market.

Sentiments and levels

Bernanke’s  relatively bullish remarks helped  prop up USD/JPY. The pair has clearly gained momentum, and is approaching a one year high. So, the overall sentiment  is bullish on USD/JPY towards this release.

Technical levels, from top to bottom: 85.50, 84.50, 84, 83.20, 82.87,  82.20, and  81.60.

5 Scenarios    

  1. Within expectations: 4.53M to 4.68M: In such a case, USD/JPY is likely to rise within range, with a small chance of breaking higher.
  2. Above expectations: 4.69M to 4.77M: An unexpected higher reading can send USD/JPY above one resistance level.
  3. Well above expectations: Above 4.77M: A sharp increase could propel the pair above a second resistance line.
  4. Below expectations: 4.44M to 4.52M: A reading lower than forecast could send USD/JPY below one support level.
  5. Well below expectations: In this outcome, the pair  could  break two or more support levels.

For more on the yen, see the USD/JPY forecast.