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Forex Flash: EUR/USD year-end target revised to 1.40 – Rabobank

The single currency is bouncing off session lows in the mid 1.3500s on Monday, gathering some traction to trade back to the 1.3570 as risk aversion is taking a breather.

Jane Foley, Chief Currency Strategist at Rabobank, commented that the cross breached the bank’s former target of 1.3500 sooner than expected, and the bank has now revised up its year-end target to 1.40

“We have revised our 12 mth EUR/USD forecasts to 1.40 to reflect both our negative USD view and the expectation that the EMU crisis will continue to lurch towards a solution, but we do not think that the road ahead will be smooth. On the anticipation that tension in the Eurozone will raise its head again, we see risk for a potentially aggressive pullback in EUR/USD before 1.40 is in the sights”, explained Foley.

Forex: USD/JPY below opening price, capped at 93.18

Having breached above the 93.00 handle, the USD/JPY reached as high as 93.18 before entering a take-profit stage which pulled the pair back down below the psychological level. At 13:30 GMT, the market found its session low, and despite a little bounce, the price remains below the opening level.
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Forex Flash: Political shakeup in Italy – Deutsche Bank

In Italy, ex-PM Berlusconi attracted some weekend headlines as he offered a series of tax cuts including repealing and refunding the controversial real estate tax which was imposed by Monti last year. “As the countdown to 24th-25th elections begin, our European economists highlight that although current opinion polls still suggest a compromise between the center-left coalition and Monti's center is the most likely post-election outcome.” predicts the Macro Strategy Analysts J. Reid and C. Tan at Deutsche Bank.
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