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Euro: Another day, the same range

Even though the euro rallied at the beginning of the New York session, breaking above yesterday's highs, it quickly lost impetus and surrendered most gains. The lack of major events or indicators has left EUR/USD adrift, encased in a comfort area around 1.3000.

Elsewhere, USD dollar is broadly mixed with the AUD standing as one of the best performers on Tuesday and the GBP on the other extreme as one of the worst, weighed by disappointing UK industrial production. Meanwhile, stocks are mixed in Wall Street and Europe.

Euro remains firmly in range

Technically speaking, the outlook has turned more neutral for the EUR/USD, with 1.2950 standing as a strong support (and possible bottom for the euro) and the 1.3100/30 area offering resistance at this point. However, the downside continues to be favored as daily indicators remain in negative territory but break of 1.2950 is needed to expose 1.2900.

On the other hand, EUR/USD has a psychological hurdle, the 100-day SMA and last week's highs conversing within the 1.3100/30 area, so a recovery above could improve the near-term outlook.

In this regard, the TD Securities team comments that the EUR remains firmly within range of the past week. "We remain more neutral on the single currency at the moment, but a strong base appears to be forming above 1.2950 and the EUR could be staging a turnaround", they say. "A break above 1.3120/30 would be constructive, although an empty calendar today could leave the pair in consolidation mode for another day".

Meanwhile, the UBS team holds a negative bias for the pair with initial support at 1.2955. "A break below would expose 1.2876 ahead of 1.2662. Resistance is at 1.3134", UBS comments.

Forex Flash: GBP decline would be welcome in UK – ANZ

The sterling’s recent weakness on the foreign exchanges remains in tact as an absence of fresh initiatives from the Bank of England and the lack of room to ease fiscal policy leave much onus on a weaker pound to help stimulate growth. The -1.2% decline in January industrial production, -3.5% MoM fall in January exports and -4.2% MoM drop in imports released today confirm the economy has started 2013 with a thud.
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Forex Flash: 10-year US treasuries trading near resistance – RBS

We continue to see a 1.70% to 2.13% range in 10-year Treasuries. According to the RBS Research Team, “The key support remains 2.13% in 10-year treasuries while near term resistance is 1.80%; a break through here should see extension to 1.70%. Moreover, momentum measures are mixed – suggesting that the range trade will continue.”
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