Thursday January 25, 2007 - 11:32:27 GMT
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INVESTICA Ltd - www.investica.co.uk
Dollar looks for housing boost
There is the potential for another challenge on dollar resistance levels below 1.2950 against the Euro and a possible move to 1.2915 if US home sales register a solid monthly increase.
The dollar found support close to 1.3030 against the Euro on Wednesday and strengthened to near 1.2950 in US trading. The Euro was undermined by cross selling against the yen with no strong independent dollar trend. The Euro strengthened back to 1.30 in early Europe on Thursday before faltering after the German data.
The US data will be more significant over the next 36 hours with a particular focus on housing data. The favourable weather conditions seen during December should offer important support to home sales and there should be firm data. The US dollar will be vulnerable to fresh selling pressure if sales weaken sharply over the month as this would suggest sustained and serious underlying weakness.
Selling against the yen will continue to hamper the Euro in the short term, but the degree of optimism over the economy will also be a very important element. The German IFO index fell to 107.9 in January from 108.9 the previous month. The headline figure is likely to have been eroded to some extent by the VAT increase and confidence is still at an historically high level.
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