Weak pending home sales data could punish dollar

Monday is light on any data releases likely to have real impact for EUR/USD, with only the pending home sales figures due out this afternoon in the US.

Last month saw this metric fall unexpectedly by 5.6%, so a rebound is probable this time around. A gain of 2.2% is anticipated for October.

Due to the fact that the US Federal Reserve has been truly inept in respect of forward guidance, mortgage rates have ticked up on the back of taper speculations. So any miss on home sales expectations as a result of consumer caution could see a weaker dollar emerge.

For now, in the absence of any negative deposit-rate rumours from EU sources, while EUR/USD is above 1.3480 the bias is for a stronger euro. We could see a retest of the September highs, around 1.3600/20, upon breaking last week’s high of 1.3564. The latter is the 50% retracement of the move down from the 25 October  high of 1.3832. Any break back below 1.3480 on a daily close puts the 1.34 level back in focus.

Spot FX EUR/USD chart

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