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

IGA, may distribute information/research produced by its respective foreign marketing partners within the IG Group of companies pursuant to an arrangement under Regulation 32C of the Financial Advisers Regulations. Where the research is distributed in Singapore to a person who is not an Accredited Investor, Expert Investor or an Institutional Investor, IGA accepts legal responsibility for the contents of the report to such persons only to the extent required by law. Singapore recipients should contact IGA at 6390 5118 for matters arising from, or in connection with the information distributed.

This information/research prepared by IGA or IGA Group is intended for general circulation. It does not take into account the specific investment objectives, financial situation or particular needs of any particular person. You should take into account your specific investment objectives, financial situation or particular needs before making a commitment to trade, including seeking advice from an independent financial adviser regarding the suitability of the investment, under a separate engagement, as you deem fit. No representation or warranty is given as to the accuracy or completeness of this information. Consequently any person acting on it does so entirely at their own risk. In addition to the disclaimer above, the information does not contain a record of our trading prices, or an offer of, or solicitation for, a transaction in any financial instrument. Any views and opinions expressed may be changed without an update.

See important Research Disclaimer.