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USD/JPY forex signal - U.S. New home sales - 26 Feb 2018

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The U.S. new home sales data is scheduled to be released today at 15:00 GMT. According to the economists polled, new home sales are forecast to rise 655k on a month over month basis in January. This follows a modest increase from 625k print seen in December 2017.

The new home sales data could however surprise the markets given the recent mixed picture in the U.S. housing markets. Data from the previous week showed that existing home sales rose at a slower pace of just 5.38 million, compared to December's gain of 5.56 million.

This was the second consecutive month that existing home sales fell. The National Association of Realtors showed that existing home sales fell 3.2%. The data accounts for nearly 90% of home sales in the U.S. and showed an annual decline of 4.8%.

With the U.S. Federal Reserve on course to hike interest rates further, concerns about rising mortgage rates were seen as one of the reason for weakness in the U.S. housing market sector. The annual decline in existing home sales was the biggest decline since August 2014.

The U.S. housing market data is often seen as a leading indicator of the economic activity in the country. Therefore, a potential slowdown in the sale of existing homes, new homes could potentially indicate tightening conditions in the market. However, at the same time, the tight labor market conditions are expected to push wages higher which could offset the higher mortgage rates.

The forex signal today is USDJPY. The currency pair closed on Friday with a spinning bottom candlestick pattern as price formed a higher low. While resistance at 108.26 was seen capping the gains, the higher low indicates a potential bottoming pattern in the currency pair.

Therefore, we are looking to go long on USDJPY at 106.50, targeting the resistance level of 108.26 with stops at 106.05 as we expect the USDJPY to follow through to close higher on the day.

forex signal usdjpy 26 feb 2018

Disclaimer: The article is written for informative purposes only and it is not financial advice. The author does not have any position in the currency pairs mentioned, and no plans to initiate a position. He wrote the article himself and expressed his own opinions. Readers should not treat any opinion expressed by the author as a specific inducement to make a particular trade or follow a particular strategy, but only as an expression of his opinion. All risks and coasts associated with online trading are your responsibility.