Euro rises above $1.31

Yen weakness resumed on Wednesday, while euro held onto gains after a stellar performance on Tuesday when it propelled to$1.32 for the first time in seven weeks, gaining 1.2 percent against the dollar.

Currency markets were more upbeat today as risk sentiment picked up after Monday’s turmoil which led to large declines in risk currencies and gold and pushed the safe haven yen up.

The dollar was broadly weaker since US data released on Tuesday supported the case for ongoing Federal Reserve monetary stimulus.

CPI data for March showed that consumer prices in the US declined fell for the first time in four months while factory output declined, reinforcing the view that the Fed will continue with quantitative easing to stimulate growth.

EURUSD opened in Asia at $1.3176 after a strong rally yesterday thanks to solid EURJPY demand. During the Asian session the pair consolidated between $1.3170 and $1.3198 with EURJPY demand providing support.

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