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US New Home Sales indicator is released monthly, and provides analysts with important data on the health of the housing sector. A higher reading than the market prediction is bullish for the dollar.

Update:  US housing data misses – Dollar down

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

Published on Wednesday at 15:00 GMT.

Indicator Background

US New Home Sales 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  new home  is likely to be the largest purchase that a consumer will make, this indicator also helps measure consumer spending and confidence.

The indicator slipped to 467 thousand in October,  short of the estimate of 473 thousand. The markets are expecting a slight improvement in the upcoming release, with an estimate of 471 thousand.

Sentiments and levels

With the Japanese economy in recession, there is plenty of room for the yen to fall. Will we see a 120 yen this week? The US economy continues to  move  in the right direction and monetary divergence is another factor in the greenback’s favor.  So, the overall sentiment is bearish on USD/JPY towards this release.

Technical levels, from top to bottom: 121.39, 119.88, 117.94, 116.82 and 114.62.

5 Scenarios

  1. Within expectations: 467K to 475K: In such a case, USD/JPY is likely to rise within range, with a small chance of breaking higher.
  2. Above expectations: 476K to 482K: An unexpected higher reading can send USD/JPY above one resistance level.
  3. Well above expectations: Above 482K: A sharp increase could propel the pair above a second resistance line.
  4. Below expectations: 460K to 466K: A reading lower than forecast could send USD/JPY below one support level.
  5. Well below expectations: Below 460K. In this outcome, the pair could break past a second support level.

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

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