From the subdued price action this week it would appear that the initial wave of risk reduction, which began at the start of the month is over. Cloud support is holding (GBP/USD closed above its daily cloud yesterday despite opening below) and signs of risk optimism are seeping back (eg, a bear Flag USD/KRW and EUR/SEK breaking below trendline support). However, we would still be wary of an overhang of stale positions preventing a rapid recovery and expect risk-on at this stage will be a selective process.
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TECHNICAL RESEARCH