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Session Recap: Majors consolidate after dramatic price action

The European session has seen consolidative moves in major crosses after the market was shaken by concerns over Italian election outcome. Meanwhile, Fed Bernanke's semi-annual testimony to the Senate Banking Committee at 15:00 GMT is the main focus of the day. The dollar is mixed, although most pairs are hovering around their opening levels. EUR/USD fell below 1.3100 for the first time since early January and now consolidates around 1.3080, having set a low of 1.3017. USD/JPY traded as low as 91.40 but is now back around 92.00. GBP/USD failed to hold above 1.5200 and it is now virtually unchanged at the 1.5160 area.

Main Headlines in Europe (in chronological order):

Member of Merkel’s CDU says Italy needs a functioning government that must stick to Monti’s reform path

Commodities Brief – Precious metals rally on Italian quagmire, Gold testing psychological 1600 barrier

BOE’s Bean: expectation is that UK growth will gradually strengthen through 2013-4

Sequestration deadline looms as US political brinkmanship prevails

Euro posed to breach 1.3000, capisci?

UK at risk of further downgrades

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US: Housing Prices Index at 0.6% as expected in December

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Commodities Brief – Precious metals await Bernanke testimony, Gold finds resistance at 1600

Gold prices made a run at the vaunted 1600 barrier and resistance (1601.65 daily maximum), however the price could not hold above this figure and pulled back shortly after, spending the European session in flux. After ranging as low as 1591, the yellow metal has rebounded at the onset of American trading, as investors are all waiting for the remarks from Fed Chairman Ben Bernanke at 15:00 GMT. Fundamentally, gold looks good, as it is being supported by its 20-day SMA. At the time of writing, the price has settled at USD $1595.64 per oz., up +0.57% Tuesday.
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