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Forex Flash: USD/JPY correction on the horizon – Westpac

According to FX Strategist Robert Rennie at Westpac, “While the USD/JPY volatility is expensive at the moment, it is expensive for a good reason – the two-week realized daily volatility is currently at 15%. The recent aggressive swings in sentiment mean it is all but impossible to sell spot without a very wide stop. The two-week time horizon looks optimal for us as it takes into account a number of key events including tomorrow’s Japanese GDP release and the BoJ meeting, this weekend’s G20 meeting, the Italian elections (February 24/25) and Bernanke’s semi-annual testimony on monetary policy to the Senate Banking Committee (February 26). We see a move back towards the 88/89.5 area as a reasonable target on a USD/JPY correction in the coming weeks.”

Session Recap: EUR/USD lacking conviction

The dollar trades weaker versus most competitors on Wednesday, with the main exception of the pound which suffered in the wake of BoE King comments, saying the UK faces a further bout of inflation and a muted economic recovery. Aside from a few economic indicators – including US retail sales - headlines flow has been light and pairs were confined to narrow ranges. Meanwhile, Wall Street indexes opened higher with the S&P500 reachings its its highest intraday level since Nov. 1, 2007.
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Forex: USD/CHF rises as ECB's Praet advises investors

While the EUR/USD falls during the US session, the USD/CHF is doing the opposite path, as it rises towards the 0.9200 mark, having already returned to the daily high printed at during the European morning, at 0.9193.
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