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Tuesday, February 27, 2007

EUR/USD: Bulls Frustrated; Short the Wrong USD

Lots of grousing this morning from EUR/USD bulls as they are not being rewarded amid the fresh USD slump. Unwinding of EUR/JPY is helping keep a lid on the pair, as are protective sales ahead of barriers rumored in the 1.3245/50 region.

Dealers do note interest from EUR/JPY longs to only sell the USD/JPY leg of the trade, but this just adds to the long position the market is nursing in EUR/USD. Central bank sales are rumored now at 1.3245, dealers report. Dealers also note a fresh report from a US consulting firm taking a hawkish stance on the ECB.

Not surprising given today's comments and M3 data. Next data point for the market is existing home sales from the US at 15:00 GMT. Economists expect a 1.3% rise in January. Traders hope for a fall to confirm other weak US releases of late and to further fuel the USD slide. EUR/USD trades at 1.3238.

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