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Forex: EUR/USD peaks at 1.3121 on better EMU confidence

Although consumer confidence in the Eurozone only improved from -23.9 to -23.6 in February, as expected, business climate rose from -1.09 to -0.73 (consensus of -1.04), industrial confidence improved from -13.8 to -11.2 (consensus of -13.2), services sentiment rose from -7.7 to -5.4 (consensus of -8.5) and economic sentiment indicator improved from 89.5 to 91.1 (consensus of 89.8).

Improving figures pushed the EUR/USD to a jump to 1.3121 high, where profit taking pulled the pair back to just below the 1.3100 area.

Confirming concerns of Italy's political stalemate was the Italian 10-year bond auction that saw yields rising from 4.17% to 4.83%. The 5-year sale also found yield moving up from 2.94% to 3.59%.

Commerzbank analysts believe there may be a near term rebound ahead of further losses after yesterday's reluctance in breaking below 1.3000 and ‘doji’. “Overhead lies a band of resistance at 1.3293/1.3335. This is the location of the 55 day ma, the previous 3 month uptrend and an accelerated downtrend – while capped here the market will remain directly offered”, wrote analyst Karen Jones.

Forex Flash: Europe tastes the bitterness of austerity – Deutsche Bank

Mr. Monti was put in place as a democratic outcome was seen as unlikely to yield the policies designed to keep Italy within the Euro, however many believe his policies have helped cause one of the worst recessions in living memory in Italy and it's not a surprise to see the voter rebellion.
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Italian 10-year yields at highest level since October 2012

The Italian Treasury held the first debt auction after the parliamentary elections on Wednesday during which it sold a total of 6.5 billion euro worth of 5- and 10- year bonds, meeting the maximum target.
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