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Talking Points:

• Yen crosses dropped as risk aversion in capital markets spread to FX, but momentum not yet secured

• Euro traders respond to data that shows Italy is in a recession, will the ECB step up its easing today?

• Both the Dollar and Pound are stable after recent moves, but further trend requires active catalysts

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It looks like there is a rebalancing in volatility and sentiment trends across the financial markets. This past session, the FX market experienced some of the stir that equities have seen through the week's open. The spread of risk aversion to different corners of the market suggests the fundamental driver is gaining a foothold in the speculative ranks. USDJPY and the yen crosses proved the epicenter of the speculative ripple in the currency market, but technicals on these pairs and fragmentation of the theme show that we are still short of full conviction and new trends. Outside the undertow from sentiment, the Euro faces the heaviest fundamental risk. Following data showing a return to recession for Italy, the ECB is set to announce whether it will upgrade its support or not. We discuss themes and data along with trading cues in today's Trading Video.

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