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Wednesday, October 25, 2006

Euro Outlook (25th October 2006)

Still the market waits for the verdict from the FOMC, due at 18:15 GMT. However, as European traders ambled down the home straight, EUR/USD only had the small matter of the latest IFO data to negotiate. Ahead of the release, there were rumours of a weaker-than-expectation number. Fueled by the disappointing Belgian data yesterday the talk was of 102.8, however, the eventual 105.3 (above the 104.5 consensus) left the Euro underpinned.

Bids into 1.2555/60 propped and soon spot was bouncing back towards the Asian session top at 1.2578. However, solid standing offers from 1.2570 back to 1.2780 have attempted to cap while EUR/JPY sales ahead of 150.00 are also supposed to have added weight. Central Bank sellers are seen into 1.2595/2600 while on the downside it is not until sub-1.2525 bids that lumpy stops reside.

Looking ahead, US Housing & Chicago Fed data are set for release at 14:00 GMT but with the main-event now within touching distance it will take a break outside 1.2545/85 before any sign of follow-through interest is instigated. Also watch for comments from the EU's Almunia.

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