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The U.S. dollar at important technical levels by Angelo Airaghi [Guest Analyst] 1/29/2007
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Last week economic data, still in line with a soft landing scenario for the U.S. economy, ease any pressure for the Federal Reserve to change current level of interest rates at 5.25 at the next Federal Open Market Committee (FOMC) meetings. Two of the weakest sectors of the economy, manufacturing and housing, are now showing signs of stabilization, but the U.S. dollar is reacting with caution to the positive numbers. How about the future? The short term trend remains bearish for the European currency against the U.S. dollar, until its price will oscillate below the 50 days moving average at 1.3080. The oversold condition, that brought the European currency from 1.2870 to 1.2940, appears to be over. However, the North American currency must react quickly and decline below 1.2845 to target 1.2800, eventually 1.2750. In fact, bullish momentum could fade, considering that the first two weeks of February are not seasonally favorable for the U.S. dollar. A move above 1.3095 is nonetheless necessary to complete the head and shoulder formation on the hourly chart and possibly lift the European currency to 1.3150, 1.320.
Angelo Airaghi is a Commodity Trading Advisor, registered with the National Futures Association and the Commodity Futures Trading Commission. He has been an active professional since 1990 working for major international financial companies. In the past 10 years, Angelo Airaghi has been an analyst and commentator for national and international media.
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