The dollar slipped after a report indicated an unexpected decline in US existing home sales, re-igniting concern over the downturn of housing sector and the Fed interest rate cut possibility.
US existing homes sales declined 2.6% to an annual rate of 5.99 million units in April, below the estimate of 6.14 million. The tame housing data surprised the market, which had anticipated a number as robust as the new home sales released yesterday. The euro rose from around 1.3445 to as high as 1.3471, and the sterling gained 30 pips to 1.9868 versus the dollar.
With recent upbeat economic US data, the dollar rebounded versus the euro and sterling. The dollar has gained against the euro for four weeks, which constitutes the longest rally in 5 quarters. However, the dollar failed to break the 1.3415 level versus the euro following the surprisingly good new home sales. The 1.3410-15 area therefore became a base of the pair¡¯s consolidation range.
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