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FXstreet.com (Córdoba) - Bank of Tokyo Mitsubishi UFJ strategists note that the euro is likely to remain stable against the US dollar in the week ahead.

Key Quotes

"The Fed’s decision to begin to gradually taper QE while strengthening their forward guidance is likely to provide only modest support for the US dollar in the near-term."

"If the US economy continues to strengthen as we expect it will help to lift US yields supporting the US dollar further. In contrast, if inflation continues to disappoint then it will likely prompt the market to delay expectations for the normalization of Fed monetary policy undermining the US dollar."

"The US PCE deflator report for November is released in the week ahead. The euro continues to derive support from tightening liquidity conditions in the euro system lifting euro-zone short rates, with the EONIA rate rising closer towards the refi rate."

"The euro has also derived support from reassuring signals that the economic recovery in the euro-zone continues to gradually strengthen. The euro-zone economic calendar is very quiet in the week ahead."
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