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The euro area financial system has been resilient through occasional bouts of financial market volatility in the second half of the year, according to the ECB’s latest Financial Stability Review. The twice-yearly report highlights that the likelihood of an abrupt rise in global risk premia has become more pronounced as concern shifts to emerging market economies. The review finds that measures of systemic stress remained contained amid periods of stress related to turbulence during the summer in Greece, followed by a sizeable correction in Chinese asset prices. 
 
While euro area banks have limited direct exposure to emerging market economies outside Europe, exposures have been gradually increasing in the euro area investment fund industry. As large emerging market economies have grown in their share of global economic output and financial market activity, so too has their role as drivers of global confidence.
 
Euro is currently being traded around 1.0610 area. Pair is likely to find support around 1.06 handle and resistance above 1.0670 level. Later today, in the US session, Durable Goods Orders, Unemployment Claims and New Home Sales figures are scheduled for a release.

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