Weak pending home sales 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

This information has been prepared by IG, a trading name of IG Markets Limited. In addition to the disclaimer below, the material on this page does not contain a record of our trading prices, or an offer of, or solicitation for, a transaction in any financial instrument. IG accepts no responsibility for any use that may be made of these comments and for any consequences that result. 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. Any research provided does not have regard to the specific investment objectives, financial situation and needs of any specific person who may receive it. It has not been prepared in accordance with legal requirements designed to promote the independence of investment research and as such is considered to be a marketing communication. Although we are not specifically constrained from dealing ahead of our recommendations we do not seek to take advantage of them before they are provided to our clients. See full non-independent research disclaimer and quarterly summary.

Spread bets and CFDs are complex instruments and come with a high risk of losing money rapidly due to leverage. 79% of retail investor accounts lose money when trading spread bets and CFDs with this provider. You should consider whether you understand how spread bets and CFDs work, and whether you can afford to take the high risk of losing your money. Spread bets and CFDs are complex instruments and come with a high risk of losing money rapidly due to leverage.