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Forex Flash: EUR/USD drifting towards 1.3085 - Societe Generale

FXstreet.com (Barcelona) - Sebastien Galy, Senior FX Strategist at Societe Generale notes that the wave of investment from Japanese investors seems largely gone by if price action is of any guide.

However, what he feels may continue is JPY replacement of EUR as a funding currency, creating a short covering that boosts EUR. Running his models, he finds that 1.3085 corresponds to the 80% quantile (20% chance the market is more optimistic on EUR), giving the market a natural target, before grinding lower. He writes, “The model is based on a 2 year swap spread and the spread between 2Y Spanish Bonds (OBL) with German Bunds.” Elsewhere he sees that EUR/CHF is a buy at current levels given limited downside.

Forex: GBP/USD dips below 1.5300

The British pound weakened slightly on Monday and backed away from its Friday's peak of 1.5362 versus the greenback, although the setback has so far been contained by the 1.5290 area. Having lost over 50 pips from highs, GBP/USD is currently trading around 1.5300, where it is down 0.2% on the day.
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Forex Flash: Price/volume divergence looms against Gilts – RBS

Gilts continued beyond the 119.56 pivot point, being the 161.8% Fibonacci projection from the March 2013 impulse wave. According to Technical Strategist Dmytro Bondar at RBS, “The price action suggests the full wave projection of 120.52 would be tested soon.”
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