EUR/USD Prediction for May 25, 2016

The EUR/USD slumped following a stronger than expected U.S. New home sales report which buoyed the dollar and rallied U.S. yields.  The EUR/USD is poised to test support levels near the 200-day moving average at 1.1099.  Resistance on the currency pair is seen near the 10-day moving average at 1.1273.  Momentum on the exchange rate is negative as the MACD (moving average convergence divergence) index prints in the red with a downward sloping trajectory which points to lower prices. The RSI (relative strength index) broke down reflecting accelerating negative momentum while printing a reading of 34, which is on the lower end of the neutral range.

U.S. new home sales surged 16.6% to a 619k annual rate in April, wow, the highest since January 2008, after a 1.3% drop in March to 531k. February’s 519k was bumped to 538k for a net 44k upward revision. The months’ supply dropped to 4.7 from 5.5. The median sales price bounced 7.8% to a record high at $321,100 from a revised $297,900.