|
|
The triangle formation is over, Euro could target 1.3340 by Angelo Airaghi [Guest Analyst] 1/2/2007
|
Sustained global economic growth in 2007 as well? It is a concrete possibility, maybe a bit slower than 2006, but expansion should remain solid enough to keep higher risk of inflation at the top list of priorities of policy makers. United States, Europe and Japan will probably share the common destiny to subdue inflation, even tough the challenge of higher rates is contained by the fierce competition of an integrated world and the still sustained energy prices. The world Gross Domestic Product could be above 3.3%, down from 2006 forecast below 4.0%, with the United States economy trends a key component to the pricing behaviour of world financial markets.
A rebound of the U.S. dollar is then in the cards, but a reversal pattern configuration is required to change the course of current strong move. In fact, the short term technical picture swing remains bearish for the U.S. currency and bullish for Euro. The triangle consolidation that began in December 2006 is completed at its apex. As a result, the European currency could now target 1.3340, eventually 1.3450/1.36, if 1.3380 is overcome. A decline below 1.3025 would instead let the price to slip to 1.2960, 1.2940.
Over the medium term, the scenario might be a little different for the U.S. dollar, especially against the Japanese Yen. The chart pattern on the monthly chart, an head and shoulder configuration with a strong divergence between price and the Rsi indicator, supports higher prices. Nonetheless, a move above 120.80 is strongly required to clear long term congestion and eventually bring the dollar to 122.00, 124.00, provide its price will not slip back below 118.80.
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.
This article contains the following sections:
You need to be logged in to Forexnews to view the remainder of this article. Please login with your username and password at the top left corner of the site, or Request Free username and password to receive full access.
