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Forex Flash: What does the EUR/USD have to offer? – Westpac, Commerzbank and UBS

FXstreet.com (Barcelona) - The bloc currency is partially retracing the ground lost after the announcement of the rescue package for Cyprus, where depositors have been obliged to take part in the agreement between the Troika and the Government. Investors are now focused on the Cypriot Parliament vote due on Monday, while the spectre of capital flight is hovering over the country.

“Cyprus may be small but we expect the nerves generated by the brutal hit to depositors of a Eurozone member to take some time to settle, especially as Italy’s political standoff continues. Advance Mar PMIs probably won’t help the euro’s cause”, assessed Sean Callow, Strategist at Westpac.

In addition, Karen Jones, Head of FICC Technical Analysis at Commerzbank, suggested that the bank’s short-term target remains around 1.2679/61. Jones added “While the next higher 1.3107 Friday high caps on a daily New York closing basis, we will retain our medium term bearish forecast”.

G.Yu and G.Berry, Strategists at the Swiss lender UBS, remain bearish on the cross, arguing “The pair posted a new low and is currently trading just above support at 1.2876. A break below would expose 1.2662. Resistance is at 1.2998 ahead of 1.3107”.

Forex: USD/JPY bounces to 95.00 mark

The risk-off drop in reaction the Cyprus bailout found its low at 94.09 and reasonable support at 94.30 area. After another test of that support as the Asian session closed, the USD/JPY was able to bounce back to the 95.00 ground, but still to fully retrace the drop earlier, from 95.30 zone.
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This morning´s institutional research, understandably, has a Mediterranean feel to it today. The unprecedented measures attached to the prospective Cypriot banking bailout have given rise to fears of contagion risk spreading across an still vulnerable Eurozone.
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