EURO/USD: a double top forming? by Angelo Airaghi [Guest Analyst] 7/21/2008

The economy is fighting to stay above water in the United States, as Federal Reserve decisions are conflicting between the necessity to implement growth and the desire to fight inflation. For now, rates should remain steady, but some relief could emerge from key markets, like crude oil, receding from recent highs. The U.S. dollar is intensifying consolidation. A breakout from actual boundaries could set the move for the next weeks/months.

The Federal Reserve appears to be well aware of the critical state of the U.S. economy, as the damages created by the credit crisis are just surfacing. During the semi annual testimony on monetary policy before the Senate, Chairman Bernanke confirms his concerns about the economy and rising inflation risks, but stated that the Federal Reserve is willing to do whatever necessary to bring things back on track. In effect, the U.S. Treasury Department and the Fed are ready to help Fannie Mae and Freddie Mac, which together manage almost half the U.S. home mortgage debt outstanding, with concrete measures. Nonetheless, there are no miraculous solutions, although some lights are passing through the cloudy sky. Crude oil prices, as an example, have reached an important top in July and might recede further over the coming days/weeks. Then, there is the dollar which is designing an interesting bullish pattern against major currencies, even though it must confirmed by a move above important resistance levels to become effective. Finally, stock indexes are trying to bounce from the recent lows. The economy is in motion, but the worst is not over yet. In June, industrial production increased 0.5% after declining 0.2% in May and 0.7% in April. Nonetheless, the bold rebound might be temporary, since it was mainly the result of ending strikes at important auto parts makers.


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:

Crude oil helping Fed?

The housing market is entering a crucial period

Inflation stays a priority for now in Europe

EURO/USD bearish pattern forming?

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