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Forex: EUR/USD sellers won 1.31 battle, war north not over

FXstreet.com (Barcelona) - The smooth sailing in the Euro was disturbed by selling interest stepping in at the 1.31 number, forcing a retreat in the exchange rate at 1.3050 where the currency seems to have caught a bid again ahead of Europe.

Trading in the most traded pair in the Foreign exchange market had as central theme the early leak of the Fed minutes yesterday, which was published 5 hours earlier than scheduled, on news that the actual official document had been distributed 'accidentally' to some institutions, a severe insider trading crime which would most likely go unpunished.

The Washington Journal is reporting that the FBI is reviving insider trading probe of government data releases , adding that "lawmakers and regulators are growing increasingly concerned about the flow of information between Washington and Wall Street, of which the release of economic data is a key part."

Back to the Fed minutes release, as Kathy Lien, co-founder at BKAssetManagement, observes: "As we anticipated, the notion of tapering asset purchases this year received more support in March, with all but a few members of the FOMC felt that it was appropriate to continue asset purchases at its current pace until the middle of this year but several see the purchases slowing later in the year and completely stopping by year end. One member even felt asset purchases should be slowed immediately."

Kathy reminds us that the less dovish stance from the Fed does not really reflect the current policy stance, as the minutes make reference to the March 19/20 FOMC meeting, which, as Katy explains, "came on the heels of a huge jump in non-farm payrolls and large rise in retail sales."

"We continue to believe that FX traders should discount the minutes because since the last meeting, we have seen a huge pullback in job growth, decline in consumer confidence, slower manufacturing and service sector activity. The only unambiguously positive development has been the persistent rise in U.S. stocks" Kathy adds.

Looking at the possible behaviour on EUR/USD going forward, in view ofValeria Bednarik, chief analyst at FXstreet.com: "The short term ascendant trend line mentioned on previous updates still holds the downside, and 1.3050 comes as immediate support for the pair. The pair is still far from signaling a bearish break. Range between 1.30/1.31 will likely rule Thursday, and only a clear break of any extreme will bring a clearer trend picture."

Meanwhile,according to FXstreet.net premium member Mr. Haitham: "A short term top has been placed at 1.3122 , but so far still trading in upward channel, so as long as the rising support holds, it's likely to continue moving upward inside the upward channel, with break of 1.3122 targeting 1.3200 levels, and a sustained break above the upward channel, will have large bullish implication and should target 1.3300 levels."

On the downside, Haitham sees "a break below the rising support may bring deeper correction towards 1.2930 levels, but remember, 1.2900/1.3040 levels are strongly supported by the daily chart and we should see resumption of the whole rally from this zone towards 1.3200 levels. In all, EURUSD will remain biased to the upside as long as trades above 1.2930/1.2900."

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