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Forex Flash: EUR/GBP buy on dips – Rabobank

The pair is resuming its upside again on Monday, consolidating gains above the key resistance at 0.8700
Recent downgrade of the UK credit rating by agency Moody’s to Aa1 plus the outperformance of the single currency at the beginning of the week are propping up the upside in EUR/GBP, although the upcoming results from the Italian elections could undermine the momentum.

Jane Foley, Chief Currency Strategist at Rabobank, comments that further QE would keep the sterling on the defensive camp in case the BoE decides to revise lower its growth forecasts. “More specifically sterling’s decline this year is a function of the pound having lost support from euro diversification trades which were supporting the unit a year ago. This has left sterling exposed to the weak set of UK fundamentals. We expect that sterling will remain vulnerable in the coming months… That said, we would view pullbacks in EUR/GBP as buying opportunities and look for a move towards the EUR/GBP 0.88/89 area medium-term”, concluded Foley.

Forex Flash: USD/JPY consolidating for three weeks since sharp rally - BBH

Marc Chandler, Global Head of Currency Strategy at Brown Brothers Harriman notes that the dollar has been consolidating against the Yen for the past three weeks after rallying sharply since the Japanese election was announced in mid-November 2012, and Abe´s election and policy mix was anticipated.
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Forex: EUR/USD upside stalls below 1.3275

As the EUR/USD retraces some of last week's losses, the chart shows an upward curve being drawn since the Asian session. However, after touching 1.3275 during the European morning, the market has stalled, trading sideways under a tight range since then.
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