Forex Flash: Euro benefiting from improvement in risk sentiment – BTMU

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FXstreet.com (Barcelona) - Lee Hardman, FX analyst at the Bank of Tokyo Mitsubishi UFJ notes that the euro is benefitting from the improvement in investor risk sentiment today with EUR/JPY touching 116, its highest level since early July 2011.

He notes that the pair has increased sharply by around 23.0% from its intra-day low in late July 2012 which has resulted in technical momentum indicators reaching historically extreme overbought levels signalling a heightened risk of a near-term correction.

He feels that the release of the latest IMF COFER report over the Christmas period revealed that FX reserve mangers had still yet to regain confidence in the euro with its share of total reported allocated reserves falling to 24.1% reaching its lowest level since Q4 2005. He writes, "Declining confidence in the euro has been most evident amongst emerging & developing economy reserve holders whose euro share has fallen from 28.5% at the end of Q2 2011 to 24.7% by Q3 2012 replaced by diversifying into the USD and "other" currencies."



The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of The NASDAQ OMX Group, Inc.



This article appears in: Investing , Forex and Currencies

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