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BUZZ-COMMENT-Dollar’s correlation with risk may be bad news for euro

The U.S. dollar’s positive correlation with risk sentiment last week could be bad news for the euro, if Wall Street continues to trend higher and U.S. economic data is resilient. |

Aug 24 (Reuters) – The U.S. dollar’s positive correlation with risk sentiment last week could be bad news for the euro, if Wall Street continues to trend higher and U.S. economic data is resilient.

Stronger-than-expected U.S. business activity and a jump in home sales revived investor hopes that the Federal Reserve was perhaps being over-cautious on the economic outlook . Wall Street and the dollar bounced in tandem Friday, after a spell of safe-haven flows during which the dollar had benefited when stocks fell.

Friday’s IMM data showed EUR longs were cut by 2,808 to 196,943 contracts during Aug 12-18 despite a 1.6% rise in the euro, which suggests that further unwinding is possible, if downside momentum starts to build.

Technically last week’s EUR/USD topside failure was capped by theā€¦

Reuters

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