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Forex Flash: EUR/USD eyes Italian election results – UBS

The market was unquestionably on a risk-averse footing over the past week as we saw heavy flows in major pairs, all expressing a negative view on their respective macro drivers. In particular, the EUR/USD suffered a fourth straight week of heavy selling, with hedge funds continuing to take off their longs.

Although net volumes were softer compared to the prior week, our books have now shown over $8.0B in net EUR/USD sales over the past four weeks, the bulk of which led by the leveraged community, with some addition flows from asset managers. According to Research Analysts Gareth Berry and Geoffrey Yu at UBS, “This suggests that if the upcoming Italian election results are shown to be 'benign' from a markets' perspective, then the EUR/USD upside could be one of the bigger movers as positioning is quite clear.”

Euro looks for strength from Italy

The bloc currency has stared the week in a firmer tone, hovering over the mid 1.32s after dipping to multi-week lows on last Friday in the region of 1.3140/45. While waiting for the results from...
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European markets rally ahead of Italian elections' results

The German DAX 30 (+0.40%), the French CAC 40 (+1.58%), the Italian FTSE MIB (+2.33%) and the Spanish IBEX 35 (+1.83%) are moving higher on Monday ahead of Italian elections' results. Investors are also preparing for a likely dovish speech in tomorrow's Fed Bernanke's semi-annual testimony.
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