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Further USD appreciation likely limited

Greenback cut a sad figure today against Asian currencies. EUR/USD witnessed some profit-taking yesterday with a test of 1.07. Today EUR/USD stands at 1.0757, while previously it was expected to reach parity by market participants.

Further USD potential appreciation is capped, as a result, albeit for short term. US Federal Reserve is expected to hike its near zero interest rates by end of this year(December likely) and also there are rate hike anticipations seen rising in next year.

"That means further USD strength could really only result from the market pricing in a more aggressive rate path. However, that would only be appropriate if inflation risks rise. There is no sign of that at present and further data is not due until Friday", says Commerzbank in a research note.

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