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Forex Flash: Consolidative tone persists - BBH

The main characteristic of the global capital markets is one of consolidation, says the BBH team. While, EUR/USD is trading at 1.3015 the two weakest currencies against the dollar, sterling and the yen, are trading firmer today.

"Sterling, which finished the North American session on a firm note after falling to new 3-year lows, saw follow through short-covering, which lifted it to a three day high of 1.4970", says BBH. "After running out of steam in Asia on Tuesday, profit-taking saw the dollar ease to test support in the JPY95.50 area in early Europe".

Sterling is the strongest of the major currencies today. There has been market talk of good demand for one month sterling calls struck near $1.55, according to the BBH analyst team. "This could reflect 1) sterling bears buying some insurance and/or 2) bottom pickers anticipating a short squeeze ahead of the budget (March 20)".

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