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Forex pairs in this Article » EUR/USD (New York) - According to Robert Rennie, an FX Strategist at Westpac, “Yesterday's ECB press conference tells us that tension is rising between central banks.”

The week of July 15 will bring this tension to the fore – the next week sees Bernanke's semi annual testimony to Congress on the 17th and 18th July followed by a G20 finance ministers meeting 19th and 20th July. If this was not enough, the Japanese upper house elections take place July 21. July 17/18 is the next big opportunity to update the Fed-tapering outlook.

Indeed, G20 finance ministers will then discuss amongst themselves what this means for financial markets and how to deal with this increased volatility. “This will be a truly informative period for FX markets, which tend to seek out central bank policy tension and exploit it to the max. We have been running with a clear sell EUR bias for many weeks now, recommending to sell the EUR/USD. As the size of the ECB's balance sheet continues to decline, we expect to see further policy announcements from the ECB.” Rennie adds.
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