EUR/USD: Trading Pending Home Sales

Pending Home Sales is a leading indicator of activity in the US housing sector. A higher reading than that forecast is good for the dollar.

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

Published on Thursday at 14:00 GMT.

Indicator Background

Pending Home Sales is a key leading indicator of the all-important housing market, and an unexpected reading could affect EUR/USD.

The indicator has shown some sharp fluctuations, making accurate estimates a tricky task. After a sharp decline in December, the indicator rebounded last month with a small gain of 0.1%. However, this was well short of the estimate of 2.9%. The estimate for the March reading stands at 0.1%.

Sentiments and levels

We could see EUR/USD find a new balance in these levels. The fresh tightening intentions of the Fed are certainly dollar supportive, but they might be watered down and / or sidelined after the storm we have seen. Flows into the euro-zone from China into the euro-zone support the common currency, but if the exchange rate nears 1.40 once again, there is a good chance we will hear again from Draghi, and this could cap any euro rise. All in all, we could have a balanced week before the key events a week later. So, the overall sentiment is neutral on EUR/USD towards this release.

Technical levels, from top to bottom: 1.3940, 1.3895, 1.38, 1.3740, 1.37 and 1.3650.

5 Scenarios  

1. Within expectations: -0.2% to 0.4%: In such a case, the EUR/USD is likely to move within range, with a small chance of breaking higher.
2. Above expectations: 0.5% to 0.9%: An unexpected reading into positive territory can send EUR/USD below one support level.
3. Well above expectations: Above 0.9%: A sharp increase in the indicator could push the pair below a second support line.
4. Below expectations: -0.6% to -0.3%: A reading lower than forecast could send the EUR/USD above one resistance level.
5. Well below expectations: Below -0.6%: A sharp decline would signal concern about the US economy. In such an outcome, the pair could break above a second resistance line.

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

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