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Forex pairs in this Article » EUR/USD (Barcelona) - Strategists at the Bank of Tokyo Mitsubishi UFJ are neutral on their prospects for EURUSD for the week ahead.

The note that the euro has strengthened against the US dollar over the past week with the pair moving back into the middle of the 1.2700 to 1.3300 range which has persisted since mid-September.

Spot has been supported over the past week by improving investor confidence in Eurozone sovereign debt with the 10 year yield spread for Italian and Spanish over German government bonds tightening by around 20 and 30bos respectively. The team notes that Eurozone Finance Ministers finally reached an agreement to provide financial support to Greece which has helped reduce investor uncertainty.

Details regarding the debt buyback have yet to be agreed in full and may be discussed at next weeks meeting. However, they feel that the release of the Eurozone PMI surveys for November in the week ahead should confirm that the Eurozone economic recession likely deepened in Q4 dampening Euro upside potential. They feel that the ECB is unlikely to alter monetary policy at next weeks meeting although they may acknowledge that growth has disappeared.
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