The following is a rewritten and expanded version of the article “U.S. Dollar Gains Ground as Existing Home Sales Rise by 1.5% – Analysis for EUR/USD, GBP/USD, USD/CAD, USD/JPY,” originally published on FXEmpire by Vladimir Zernov. This version includes additional analysis and context to reach a minimum word count of 1000 and uses bullet points where necessary for easier reading.
U.S. Dollar Strengthens Amid Better-Than-Expected Housing Data: Forex Market Analysis
The U.S. dollar climbed against major currencies on Friday, as financial markets digested positive U.S. housing data. The report from the National Association of Realtors revealed a 1.5% increase in existing home sales for the month of May, surpassing expectations and reinforcing optimism in the resilience of the U.S. housing market.
This article analyzes the performance of several key USD pairs—EUR/USD, GBP/USD, USD/CAD, and USD/JPY—following the data release and assesses the broader implications for traders and investors.
U.S. Existing Home Sales Post Unexpected Rise
The key catalyst behind Friday’s forex moves was the unexpected increase in U.S. existing home sales. According to the National Association of Realtors, home sales rose by 1.5% in May to a seasonally adjusted annual rate of 4.11 million units. This beat economists’ expectations of a slight decline and marked a turnaround from earlier weakness in housing-related data, which had been suppressed by high mortgage rates and tight inventory.
Key findings from the report:
– Existing home sales rose to 4.11 million units, an increase of 1.5% month-over-month.
– Median existing home price increased to $419,300, setting a new record.
– Despite the positive headline number, total sales remained down 2.8% compared to the same period in 2023.
– Inventory remains tight, with just 3.7 months’ supply at the current sales pace.
The data was a reassuring signal to market participants concerned about the impact of elevated interest rates on the housing sector. This, in turn, supported demand for the U.S. dollar due to the perception of continued economic resilience and a reduced chance of aggressive monetary easing from the Federal Reserve.
EUR/USD: Bearish Momentum Resumes
The euro weakened against the U.S. dollar on Friday, continuing a recent slide that was exacerbated by the release of the U.S. housing data. EUR/USD dipped below 1.0700 as bullish sentiment toward the greenback strengthened.
Factors contributing to EUR/USD decline:
– Relative economic strength in the U.S. compared to the eurozone.
– Ongoing uncertainty regarding the European Central Bank’s monetary policy outlook, with officials maintaining a wait-and-see approach following a recent rate cut.
– Political risks in France after President Emmanuel Macron called snap parliamentary elections, adding instability to the EU’s second-largest economy.
Technical analysis for EUR/USD:
– The pair tested support near the 1.0675 level, which marks a prior consolidation zone from mid-April.
– If momentum continues downward, the next key support lies near 1.0635, followed by a retest of the 1.0600 round number.
– On the upside, resistance is seen at 1.0725, followed by stronger resistance approaching 1.0770.
Short-term outlook: Neutral to bearish. Unless macroeconomic data from the eurozone improves substantially or the Fed shifts to a more dovish stance, further downside pressure could persist.
GBP/USD: Pullback Continues Amid Dollar Strength
The British pound also weakened against the dollar, though losses were somewhat moderated compared to its continental counterpart, due in part to a better-than-expected retail sales report released in the UK. GBP/USD moved toward the 1.2625 level in Friday’s trade.
Supporting and opposing factors:
– UK retail sales grew 2.9% in May, against forecasts of
Explore this further here: USD/JPY trading.