March Home Prices Miss 1% Estimate, Pressures USD

EUR/USD broke above the 1.0800 handle shortly after the release, climbing from a two-week range near 1.0720. The pair had been waiting for a catalyst to test the ceiling. The home price miss provides that catalyst by reopening the rate-cut debate. A lower-for-longer dollar scenario is euro-positive, and the break above 1.0800 suggests the initial momentum is with the bulls.

GBP/USD rose roughly 30 pips on the print. Sterling has its own support from sticky UK services inflation and a relatively hawkish Bank of England. The dominant driver this session, however, is the dollar leg. The housing miss extends the dollar’s weakness after softer May ISM Manufacturing data earlier in the week. For traders using the forex correlation matrix, the pattern is a classic risk-on dollar-sell signal: weak housing data reduce the probability of the Fed holding through year-end, and the dollar falls against both the euro and sterling in tandem.

The Next Data Point to Watch

The decisive test comes with the April PCE report due in late May. If shelter inflation posts even a modest deceleration, the shift toward rate-cut positioning will accelerate. The risk for dollar bears, however, is that the home price miss is dismissed as noise. New home sales and building permits remain elevated. Housing starts could rebound in April, muddying the signal. For traders maintaining a short-dollar bias, the stop level for EUR/USD sits at 1.0720, the prior range floor. A break below that level would negate the rate-cut narrative and suggest the market is waiting for more data before committing.

The March S&P/Case-Shiller print does not settle the rate question on its own. It shifts the burden of proof onto the next round of inflation data. Traders should set alerts for the PCE release and watch the currency strength meter for the first sign of a sustained trend shift. The weekly COT data will also show whether speculative positioning is already rotating toward a weaker dollar.

Alerts for the April PCE and the June Fed meeting will be the next concrete decision points.