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EUR/USD Bullish Momentum Likely Continue If Existing Home Sales in the US Comes Below Expectation
EUR/USD Forecast & Technical Analysis
Eurozone – German Flash Manufacturing PMI
Later in the week, on Friday, at GMT 7:30 a.m., the Markit will release the German Flash Manufacturing PMI data. It measures the level of a diffusion index based on surveying around 500 purchasing managers in the country.
Pepperstone traders consider the Flash Manufacturing PMI figure to be a leading indicator of the German economic climate. Because, purchasing managers usually have insight regarding business conditions such as employment, production capacity, and new bulk orders and inventory situation.
Last month, the German Flash Manufacturing PMI figure came out at 55.6. Analysts are expecting it to come out slightly lower, at 55.3.
United States – Existing Home Sales
On Friday, at GMT 2:00 p.m., the US National Association of Realtors released the existing home sales number. It is an annualized number of residential buildings that were sold during the last month in the country. However, this figure excludes the number of new building constructions.
The sale of an existing home usually has a wide-spread positive ripple effect in the local economy. So, collectively this figure acts as an excellent leading indicator of the overall economic health of the country. Therefore, CFD traders consider the existing home sales number to be important data as it tends to have a considerable market impact.
Last month, the US existing home sales figure came out at 4.72 million. The forecast for this month is currently set at 5.40 million.
The EUR/USD remained in a strong uptrend since the middle of March 2020. Over the last few months, it has gained around 1250 pips. It reached the 1.1900 level at the end of July and found a strong resistance. Over the last several weeks, the EUR/USD traded in a narrow range between 1.1700 and 1.1900. Yesterday, it broke above the resistance near 1.1900 on the daily timeframe. Currently, it is trading just above this resistance. However, it is important to note that the downtrend line on the Stochastics indicator has broken. From a technical perspective, the EUR/USD appears to be gaining bullish momentum.
The German Flash Manufacturing PMI will likely come way above the 50 thresholds, around 55.3. On the other hand, analysts are expecting the US Existing Home Sales to go up from 4.72 million to 5.40 million. Given the weak economic situation in the US, if the actual figure comes out even slightly less than the forecast, it will have a negative effect on the Dollar. We believe it would set a bullish fundamental outlook for the EUR/USD this week. Therefore, if the EUR/USD continues to trade above the resistance near 1.1900, it would likely attract additional bullish momentum in the market.
Hence, Forex traders should look out for trading opportunities above this major resistance level around 1.1900.
Market Analyst / Trading Consultant . Asif worked as a prop trader for almost a decade, and later he managed trading operations for one of the largest foreign exchange strategy developers in Europe. Currently, he works as a trading consultant to several brokers and writes about various tech and financial topics. You can reach him at firstname.lastname@example.org