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Forex Flash: EUR/USD sell-off would lose impetus – Danske Bank

The bloc currency has regained the 1.3100 mark on Wednesday, after positive data from the US on Tuesday and a strong defence of the ongoing QE programme by Chief Bernanke prompted investors to reposition on risk associated assets.

According to Chief Analyst A.Lohman Rasmussen at Danske Bank, the recent readings of oversold levels in the cross would be exaggerated, and he would recommend investors to “start gradually building EUR/USD longs and increase USD assets/income hedges”.

“In general, we argue that we would need to see a more significant bear market in risk assets or a more pronounced sell-off on the European sovereign bond market for EUR/USD to correct much below 1.30 and towards 1.25”, concluded the analyst.

European markets up on EMU confidence and Italy bond auction

The German DAX 30 (+0.09%), the French CAC 40 (+0.58%), the Italian FTSE MIB (0.0%) and the Spanish IBEX 35 (+0.66%) are edging higher on Wednesday as confidence in the Eurozone improves and the Italian 10-year bond auction found better than expected yields, although higher from 4.17% to 4.83%. The 5-year sale also found yield moving up from 2.94% to 3.59%.
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