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.
Update: the actual number is 5.04 million, above expectations, EUR/USD slides.
Here are all the details, and 5 possible outcomes for EUR/USD.
Published on Tuesday 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 4.89 million in May, a six-month high. This easily beat the estimate of 4.74 million. The markets are expecting the upward swing to continue, with the June estimate standing at 4.98 million. Will the indicator meet or beat this rosy prediction?
Sentiments and levels
The euro has lost close to two cents in July and the general direction of the pair remains down, due to a long list of reasons. Euro/dollar could take a break before the next move and consolidate around 1.35. US data has turned mixed and that trend could continue this week. A drop in IFO will not be so surprising after the weak ZEW number. Assuming the Ukraine-Russia and Israel-Hamas conflicts will take just a small step back from the headlines, we can see a return of stability for at least a brief period. So, the sentiment is neutral on EUR/USD towards this release.
Technical levels, from top to bottom: 1.3650 1.3585, 1.3550, 1.35, 1.3450 and 1.34.
5 Scenarios
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Within expectations: 4.95M to 5.01M: In such a case, EUR/USD is likely to move within range, with a small chance of breaking higher.
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Above expectations: 5.02M to 5.06M: An unexpected higher reading can push EUR/USD below one support level.
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Well above expectations: Above 5.06M: A sharp increase could push the pair below a second support level.
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Below expectations: 4.90M to 4.94M: A reading lower than forecast could send EUR/USD above one resistance level.
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Well below expectations: Below 4.90M: A sharp decline 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.