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Euro in 'technical' rebound

New York - The euro rebounded against the dollar on Thursday in what traders called a "technical" move after the dollar's strong climb that also boosted the yen against the greenback.

The euro climbed to $1.0735 at 22:00 GMT after spending three days well below the $1.07 line, the common currency's weakest in seven months.

However, said Kathy Lien of BK Asset management, the correction in the dollar-euro pairing "is technical and not fundamental."

She noted that all evidence shows the US and European central banks on diverging paths, with the Federal Reserve increasingly expected to tighten monetary policy next month and the European Central Bank to ease more, a situation that will favour a stronger dollar.

The newest US economic data "are all consistent with strength and recovery in the US economy," said Lien.

Meanwhile the yen edged up to 122.87 against the dollar after the Japanese central bank held firm on policy on Thursday even as the world's third-largest economy slipped into its second recession in two years and monthly exports fell.

"While the Bank of Japan literally ignored the renewed fall in GDP in today's policy statement, we think that a likely moderation in underlying inflation will eventually force policymakers to introduce more stimulus," said Marcel Thieliant at Capital Economics.

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