Scotiabank reported the Canadian Dollar was flat against the US Dollar in Tuesday’s North American session, with modest weakness on cross rates. Support was linked to higher oil prices and narrow yield spreads, with USD/CAD facing resistance above 1.37. Its fair value estimate for USD/CAD is in the mid‑1.34s versus spot near 1.37, implying the CAD is undervalued. Canadian data updates were limited to existing home sales, which showed a slower pace of contraction in February.

Central Bank Focus Ahead

Attention is on Wednesday’s Federal Reserve and Bank of Canada meetings, with expectations of a neutral BoC message and cautious dovishness from the Fed. Technical momentum was described as neutral, with RSI just above 50. Price action shows resistance above 1.37 and a floor just below 1.35. The 50‑day moving average is 1.3697, and the near-term range is forecast at 1.3650 to 1.3720. We see the USD/CAD pair is trading near the 1.37 mark, which feels overvalued compared to our fundamental fair value estimate in the mid-1.34s. The price is currently contained within a tight 1.3650 to 1.3720 range, confirming there is significant resistance overhead. This suggests the market is waiting for a clear catalyst before making its next major move. Support for the Canadian dollar is being reinforced by WTI crude oil prices holding firm above $85 a barrel, a clear positive for Canada’s economy. The yield spread between US and Canadian 2-year bonds has also remained quite narrow, recently sitting near 35 basis points, which limits a key source of US dollar strength. These factors strengthen the view that the pair should eventually move lower.

Options Strategies For A Range

Given this stable range, selling options volatility appears to be a practical strategy for the coming weeks. We could implement an iron condor by selling a call option above 1.3720 and a put option below 1.3650 to collect premium. This position profits if the pair remains contained as we head into Wednesday’s central bank announcements. Looking back at the end of 2025, we saw both the Fed and the Bank of Canada holding interest rates steady to ensure inflation was under control. With Canada’s latest February CPI data showing a manageable 2.7% annual inflation rate, the BoC has room to maintain its neutral stance. A cautiously dovish tone from the Fed this week could be the trigger that finally pushes the pair lower. For those who believe a correction towards fair value is imminent, buying USD/CAD put options provides a direct way to position for a stronger Canadian dollar. A put spread, such as buying a 1.3600 put and selling a 1.3450 put for April expiration, would reduce the initial cost. This strategy offers a defined-risk approach to capitalize on a move back towards that fundamental value. Create your live VT Markets account and start trading now.

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US 2-year yields have moved above a previous downward trend, pointing to changing expectations for US monetary policy amid stagflation risk. Gold is described as more exposed as this shift alters the macro backdrop. Positioning linked to currency debasement has become crowded, based on analysis of 13F filings. The most popular physically backed gold ETF is held by institutions at roughly 67% of the level of the most widely held ETF on record. Money supply growth has returned to a pace closer to that of the wider economy. Rate markets are priced for a longer pause, with limited room left to the expected terminal level. Concerns over Federal Reserve independence are described as easing due to recent obstacles in the Fed Chair confirmation process. A US Supreme Court ruling related to the Lisa Cook case is expected within 2–3 months. Central bank buying is still a supportive factor for gold, but the pace of official purchases has fallen over the past year. The Middle East conflict is linked to expectations of further declines in official sector buying, due to effects on Gulf economies. With US 2-year yields breaking above 3.95% for the first time since late 2024, the opportunity cost of holding gold is increasing significantly. This move signals that the bond market is getting more worried about a stagflationary environment where the Fed keeps policy tight. For gold, which offers no yield, this makes it a less attractive asset. The debasement trade appears overextended, as we’ve seen immense institutional participation over the last two years. While holdings in the largest gold-backed ETF are still substantial, filings from the fourth quarter of 2025 showed the first net decrease in institutional ownership since the start of 2024. This suggests the strongest hands may now be looking to reduce their exposure. Key pillars supporting gold are also weakening as we head into the second quarter of 2026. The Federal Reserve’s data from last month showed M2 money supply growth holding steady near a 2.1% annual rate, far from the levels that initially fueled fears of currency debasement. Meanwhile, rate markets are pricing in less than a 20% chance of a rate cut before September, removing a major catalyst for gold prices. Even the most reliable buyers are slowing down. The World Gold Council’s report for the final quarter of 2025 confirmed that net purchases by central banks have now declined for three consecutive quarters. With political concerns around Federal Reserve independence also easing after last year’s confirmation hearings, a primary safe-haven argument for holding the metal has been neutralized. Given this backdrop, traders should consider positioning for downside or sideways price action in the coming weeks. Buying puts or establishing put debit spreads on major gold ETFs provides a defined-risk method to profit from a potential decline below the $2,300/oz support level. For those with a less aggressively bearish view, selling call credit spreads above the recent highs around $2,450/oz could capture premium as gold struggles to advance against these policy headwinds.

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US pending home sales fell by 0.8% year on year in February. This was down from a 0.4% fall in the previous period. The data points to weaker activity in the pipeline for home purchases compared with a year earlier. Pending home sales track signed contracts, not completed sales. The continued slide in year-over-year pending home sales, now at -0.8%, signals that demand is softening further as we enter the spring season. This weakening trend suggests that elevated mortgage rates are capping buyer activity more than previously thought. We should anticipate this softness to translate into weaker existing home sales figures in the coming months. This data increases the probability that the Federal Reserve will hold rates steady at its next meeting, as it points to a cooling economy. Looking at interest rate futures, the market is now pricing in a slightly greater chance of a rate cut by the third quarter of this year, a shift from just last week. We should consider positioning for a flatter yield curve, as long-term growth expectations may decline. For equity derivatives, we see this as a bearish indicator for homebuilder ETFs like ITB and XHB, which were highly sensitive to rate fluctuations throughout 2025. Buying put options on these sectors or on major home improvement retailers could be a prudent hedge against a further downturn in housing activity. Recent earnings from these companies have already highlighted concerns over consumer affordability, with this data confirming the trend. The weakness in housing, a key pillar of the economy, introduces broader market uncertainty, which we can see in the VIX ticking up slightly to 16.5 this morning. This environment makes protective put strategies on the S&P 500 more attractive, especially as a hedge against any spillover effect into consumer spending. A slowing housing market historically precedes a slowdown in discretionary purchases. This data is set against a backdrop of 30-year fixed mortgage rates that have stubbornly remained above 6.3%, according to the latest Freddie Mac survey. This affordability crunch is the primary driver behind the slowdown and reinforces our view that housing-related assets are vulnerable. We should monitor weekly mortgage application data closely for any signs of a reversal or further deterioration.

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The Iran war has increased market links to energy prices. Higher oil prices and weaker global growth are supporting the US dollar, with Asia expected to be hit hardest due to higher energy import costs. Asia foreign exchange is described as central to the broader direction of the dollar. Disruption risk around the Strait of Hormuz is presented as a factor that could push energy prices higher and weigh further on global growth.

Policy Response Could Shape Currency Impact

The impact on currencies may depend on policy responses outside the US. Larger fiscal support could protect real incomes, ease inflation pressure, and allow central banks to raise real rates, which could support local currencies. Foreign exchange moves are also tied to expectations for US Federal Reserve policy. Events that lead markets to price a more dovish Fed stance than elsewhere could partly offset the effect of higher energy prices on the dollar. Recent moves over the past two weeks are described as dollar bullish, but forecasts are left unchanged until April due to uncertainty. The article notes it was produced with the help of an AI tool and reviewed by an editor, with content curated by the FXStreet Insights Team. The ongoing conflict in Iran has made energy prices the market’s primary driver. We see that as long as tanker traffic through the Strait of Hormuz is disrupted, the dollar will likely find support from weaker global growth. Brent crude prices have confirmed this view, recently crossing $115 per barrel for the first time since the turmoil of late 2025.

Market Volatility And Positioning

This shock is hitting Asia the hardest, making Asian currencies a key pressure point for the dollar’s direction. The Japanese Yen has already weakened past 160, a multi-decade low, while the Korean Won is down over 8% year-to-date. Traders should consider buying US dollar call options against a basket of Asian currencies to position for continued strength. We are watching central bank responses closely, as a large fiscal stimulus outside the U.S. could temper this dollar rally. However, recent data from the CME FedWatch tool shows markets now expect fewer Fed rate cuts in 2026 than previously thought. This contrasts with the European Central Bank, which appears more prepared to ease policy, widening the rate differential in the dollar’s favor. The high level of uncertainty means option premiums have increased, reflecting the risk of sharp market moves. Currency market volatility has surged to levels reminiscent of the banking stress we saw back in early 2025. This environment suggests that even strategies that are simply long volatility, not just directionally long the dollar, could be profitable in the coming weeks. Create your live VT Markets account and start trading now.

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Germany’s debt brake was reformed last year to allow more funding for infrastructure and defence. The 2025 and 2026 budgets have now been approved, and fiscal spending is expected to rise this year. The German budget deficit is expected to rise from 2.7% of GDP in 2025 to above 4% this year. It is projected to remain elevated through 2029.

Growth And Policy Transmission

Two factors are set to shape the effect on growth and cross-border effects: spare capacity in Germany and the euro area, and the European Central Bank’s policy response. A slower policy response could lift growth more in Germany and elsewhere, but would raise inflation pressures. Germany is assessed as having only a small output gap, with a tight labour market linked to demographic pressures. Some investment funding is expected to flow into consumption, which may limit the growth lift. German annual growth is projected to be higher by about 0.5pp to 0.8pp until 2029. Inflation risks are mainly on the upside. Spillovers to other euro area countries are expected to be concentrated in the first two years. The cumulative euro area GDP effect is estimated at 0.25pp, with a ceiling of 0.5pp.

Market Implications And Positioning

Based on the fiscal stimulus approved last year in 2025, we expect the German budget deficit to expand significantly from 2.7% to over 4% of GDP this year. This spending is intended to fund infrastructure and defense, providing a direct boost to the German economy. We are already seeing early signs of this, with German industrial production showing a modest 1.0% month-on-month rise in January. The primary risk is that this fiscal push will fuel inflation more than growth, especially with the German labor market remaining so tight due to demographics. The latest Eurozone HICP flash estimate for February showed inflation at a stubborn 2.6%, suggesting price pressures are persistent even before this new spending fully hits. We should therefore consider positioning for inflation to continue surprising to the upside, potentially using inflation swaps. This environment puts upward pressure on bond yields as the market anticipates higher inflation and a potential policy response from the ECB. We have already seen the German 10-year bund yield rise by 25 basis points over the last month. We see value in establishing short positions in German government bond futures, like the Bund or Bobl, to capitalize on this expected trend. For equities, the fiscal spending should be a tailwind for German corporate profits, particularly in the industrial and defense sectors. With the March Ifo Business Climate index showing an uptick in sentiment to 93.5, we see an opportunity for targeted upside exposure. Buying call options on the DAX index offers a way to participate in this potential rally while defining risk. The positive growth impulse is not limited to Germany, with spillover effects expected to lift the wider Euro area GDP. This broad-based improvement, combined with rising inflation risks, could strengthen the euro. We believe establishing long positions in the euro against the US dollar is now more compelling. Create your live VT Markets account and start trading now.

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Celanese Corporation (NYSE: CE) makes engineered materials and acetyl products used in areas such as automotive components and consumer electronics. The share price peaked near $62 in summer 2024 before falling through the second half of 2024. CE bottomed around $35–36 in late December, then rebounded to about $61 by late January 2026. The price has struggled at $61.24, which matches the prior peak area from summer 2024. The stock tested $61.24 twice in 2026, in late January and mid-March. Both attempts were rejected, followed by sharp reversals. CE is now near $56, a level that has acted as support and resistance in the past. This area is being watched as a secondary reference point. A bullish move would require a confirmed daily close above $61.24, rather than a brief intraday move. If that occurs, the price would be above $62 with less overhead supply. A bearish case remains if $61.24 keeps acting as a ceiling and the price breaks below $56. That could open a move towards the mid-to-upper $40s, while a daily close below $50 would negate the recovery trend. As of today, March 17, 2026, we see Celanese stuck at a critical point after failing for a second time to break the $61.24 resistance level. This price is significant because it marks the high point from back in the summer of 2024, before the stock began its long decline. This double rejection suggests sellers are firmly in control at this price, creating a major hurdle for any further upward movement. The market’s hesitation is backed by recent economic data that points to a sluggish industrial sector. The February 2026 ISM Manufacturing PMI, a key indicator of factory activity, registered at 49.8, just below the growth threshold of 50. This, combined with flat auto sales figures for January and February, gives fundamental weight to the idea that industrial demand may not be strong enough to push CE through this supply wall. For traders anticipating a move lower, the recent failure at $61.24 presents a clear opportunity. Buying put options with strike prices below the current support zone of $56, such as the May expiration $55 or $52.50 puts, could be a compelling strategy. This allows for participation in a potential slide towards the mid-$40s while strictly defining the maximum risk on the trade. On the other hand, we can’t ignore the powerful rally from the sub-$36 lows seen at the end of 2024, which was fueled by a strong fourth-quarter earnings report in January 2025. This shows there is significant buying interest at lower prices. The bulls are simply waiting for a clear signal that the sellers at $61.24 have been exhausted before they commit more capital. A patient bullish trader should wait for a confirmed daily close above the $61.24 line before acting. If that happens, buying call options or initiating bull call spreads, like buying a $62.50 call and selling a $67.50 call, would be a way to play the subsequent breakout. This approach avoids getting caught in the current chop and only enters once upward momentum is confirmed. Right now, the standoff between buyers and sellers is keeping implied volatility relatively high, making options more expensive. This environment might favor option-selling strategies, such as credit spreads, for those who believe the stock will remain pinned between $56 and $61 in the near term. For example, selling a put credit spread below $56 could be a way to profit if that support level holds. Ultimately, everything hinges on the two key levels presented. We should treat a confirmed break below $56 as a trigger to initiate bearish positions, targeting a retest of lower levels from late 2025. Conversely, a decisive close above $61.24 is the green light to position for a new leg higher, as it would invalidate the current bearish pattern.

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Gold traded in a narrow range on Tuesday, near $5,020 and close to one-month lows. A softer US Dollar and lower Treasury yields helped limit further falls. Markets are focused on policy decisions from the Fed, ECB, BoE, BoJ, BoC and SNB. Rates are widely expected to stay unchanged, with attention on guidance as higher oil prices linked to the US-Iran war raise inflation concerns.

Central Bank Focus

Expectations have shifted towards fewer and later rate cuts, keeping pressure on non-yielding gold. Traders now price in about 25 bps of Fed cuts by year-end, down from more than 50 bps earlier. The CME FedWatch Tool shows the Fed expected to stay on hold through April, June and July. September is seen as the most likely start for a cut, with a 50.8% probability. Geopolitical tension also supported gold, as disruption in the Strait of Hormuz continued and the US-Israel and Iran conflict showed no clear easing. Kevin Hassett said the conflict could be resolved in four to six weeks. On the 4-hour chart, gold stayed below the 100-period SMA near $5,158 and faced resistance at the 200-period SMA at $5,061. RSI was around 39 and ADX near 35.

Technical Levels Update

Support sat at $4,967, then $4,850 and $4,650. A break above $5,061 could target $5,158 and then $5,200. Looking back at the market anxiety of 2025, we recall how gold’s price was trapped by the dual threats of a US-Iran war and central bank hesitation. The focus was on whether policymakers would delay rate cuts due to oil-driven inflation fears. That landscape has now changed, presenting different risks and opportunities for us today on March 17, 2026. The de-escalation of the Strait of Hormuz conflict in late 2025 removed the significant war premium that was supporting gold prices. WTI crude oil, which briefly spiked over $110 per barrel during that crisis, has since stabilized and now trades around $85. This has significantly dampened the inflation fears that dominated markets last year. With the geopolitical flare-up in the rearview mirror, our attention has returned squarely to economic data. The latest US Consumer Price Index report for February 2026 showed inflation at 2.8%, which, while still above the 2% target, confirms a cooling trend from the 2025 highs. This has shifted market expectations firmly toward potential rate cuts this year. For derivative traders, this means the strategy of buying call options as a hedge against geopolitical conflict is no longer the primary play. We should instead be looking at implied volatility, which has fallen considerably from the peaks seen during the 2025 conflict. Selling volatility through strategies like short strangles could be advantageous, assuming no new major economic shocks before the next central bank meetings. The market is now pricing in a nearly 60% probability of a 25-basis-point rate cut by the Federal Reserve in its June 2026 meeting. Traders can position for this by using call spreads on gold, which offers a cost-effective way to bet on a dovish policy shift driving prices higher. This is a shift from the defensive puts we saw being bought when gold was struggling above $5,000 last year. The technical levels from 2025, such as the $5,061 and $5,158 moving averages, are now distant memory and represent major resistance. With gold currently trading near $4,750, we should structure new positions around the developing support base near $4,650. Any options strategies should use strikes relevant to this new, lower trading range. Create your live VT Markets account and start trading now.

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Amazon rose by about $2 in pre-market trading compared with the prior close. The move suggests early strength ahead of the regular session. A pullback may occur near $218.94, described as a gap-fill level. This is the first resistance area where price may meet selling or pause. The $218.94 zone relates to a prior gap between a market close and the next open. Such gaps can attract supply when price approaches from below. A second resistance level is set at $222.58, also linked to a gap fill. This acts as the next barrier if the price moves above $218.94. Together, $218.94 and $222.58 form a two-step resistance area. The stock would need to move above both levels to keep the upward move going. The gap between $218.94 and $222.58 provides a range for further gains if buying continues. It also defines prices where reversals or profit-taking may occur. $218.94 is presented as the first test of the pre-market move. If that level is broken, attention may turn to $222.58. With Amazon showing renewed strength following its recent “Prime AI” integration news, we are watching for a potential test of new highs as we head toward Q1 earnings season. The stock is building momentum, but we can look to past behavior to guide our strategy for the coming weeks. This creates opportunities for traders who are prepared for the key levels ahead. We saw a similar pattern of pre-market strength in the spring of 2025, where an early pop ran directly into a resistance level at a gap fill around $218.94. That rally paused at that exact spot, providing a clear example of how these overhead supply zones can stall upward momentum. That historical price action serves as a valuable roadmap for the current setup. Right now, the first meaningful resistance zone sits near the $245 level, which represents the highs from earlier this year. If the current buying pressure continues, this is the first area where we should expect to see profit-taking or consolidation. A decisive move through $245 would be very bullish, but a failure here could lead to a quick pullback. Given this, traders might consider using bull call spreads, such as buying the April $240 calls and selling the April $245 calls. This strategy captures potential upside to that resistance level while defining risk and lowering the entry cost. It is a way to stay in the trade while respecting the historical tendency for these zones to cause a pause. Current market data shows implied volatility for April AMZN options is elevated at 38%, which is notably higher than its 90-day average of 30%. This indicates the market is already pricing in a significant move, making spreads a more cost-effective approach than buying options outright. This elevated volatility confirms that other traders are also anticipating a test of these key levels. Should the stock approach $245 and show signs of weakness, like it did near $218.94 last year, we would look to initiate bearish positions. A rejection at that level could be an opportunity to buy puts or sell bear call spreads with a target back toward the low $230s. The plan is to trade the reaction, not just the anticipation.

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Rabobank’s Senior FX Strategist Jane Foley reviews the Japanese yen ahead of G10 central bank meetings and possible Bank of Japan policy moves. Rabobank raised its USD/JPY forecasts out to 6 months and expects the pair to stay around current levels on a 1‑month view. The bank expects the US dollar to stay supported due to uncertainty linked to the Middle East conflict. It also expects any USD/JPY falls to be limited, even if Governor Ueda maintains a hawkish tone.

Bank Of Japan Policy Backdrop

The BoJ has been tightening since March 2024, when it moved policy rates out of negative territory and began shifting away from QQE. Despite this, policy settings are still very accommodative, based on real interest rates. Surveys of economists indicate the BoJ may keep raising interest rates in H1 this year, despite growth pressure from higher imported energy prices. Strong outcomes from spring wage talks for unionised workers are seen as a factor supporting consumption and corporate profits. Yen weakness is pushing up import prices, and Finance Minister Katayama increased verbal intervention against the currency’s fall. The report says fear of intervention may deter tests of USD/JPY 160 in coming weeks, while speculation about an April rate rise could limit near‑term pressure. Looking back to this time in 2025, we were navigating a clear conflict between a hawkish Bank of Japan and a strong US dollar. The market was focused on the risk of intervention, which put a cap on USD/JPY near the 160 level. This created a tense, two-way trading environment for the yen.

Implications For Derivatives Traders

That expectation for policy tightening did materialize, with the BoJ hiking its policy rate twice in 2025 to the current 0.50%. This was driven by persistent inflation, which the latest data shows is still running at 2.3%, and another strong outcome from the recent “shunto” spring wage negotiations. As predicted last year, USD/JPY did test above 160 before authorities stepped in, pushing the pair back towards the current 155 range. For derivative traders today, the continued wide interest rate differential between the US Federal Reserve, at 4.25%, and the BoJ makes the yen carry trade attractive. This environment supports selling yen volatility, as intervention fears from above and carry trade demand from below are keeping the pair in a fairly defined range. We see this in the one-month implied volatility for USD/JPY, which has fallen to just 6.5%, near historic lows. Given the low volatility, traders should consider strategies that profit from this stability, such as short strangles or iron condors. However, the risk is that the market is becoming too complacent about the BoJ’s willingness to act again. A surprise hawkish statement in the coming weeks could cause a sharp drop in USD/JPY and a spike in volatility. Therefore, a prudent approach is to hedge these positions by purchasing cheap, long-dated JPY call options against the USD. This provides protection against a sudden strengthening of the yen if the BoJ signals a more aggressive hiking cycle than currently priced in. This allows us to continue collecting premium from the range-bound price action while being prepared for a shift in the central bank’s stance. Create your live VT Markets account and start trading now.

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GBP/USD held near 1.3315 on Tuesday after a modest rise on Monday, staying close to three-month lows. The move comes as uncertainty over the Middle East conflict continues to affect expectations for global growth and inflation, while the US dollar remains the main safe-haven choice. Since the conflict involving Iran began, the dollar has gained more from safe-haven demand than gold, government bonds, and currencies such as the Swiss franc. Over the past three weeks, the pound has fallen about 1.7%, compared with losses of around 2.0% for the yen and 3.0% for the euro.

Pound Resilience Amid Risk Off

The pound’s smaller drop has been linked to the UK’s lower reliance on energy imports and higher interest rates. During Tuesday’s European session, GBP was down 0.27% to around 1.3280 against the US dollar, though it was higher versus the New Zealand dollar. Markets are focused on the Bank of England decision on Thursday. The BoE is expected to keep rates unchanged at 3.75%, with a predicted 7-2 vote split, as the conflict involving the US, Israel, and Iran has lifted inflation expectations in the UK and globally. We recall this time in 2025 when the pound was holding above 1.3300, grappling with the economic fallout from the conflict in the Middle East. The US dollar was the clear safe-haven choice then, drawing in capital and putting pressure on other currencies. This set the stage for much of the divergence we have seen since. Fast forward to today, March 17, 2026, and we see GBP/USD trading much lower, near 1.2450. The interest rate differential has widened, with the US Federal Reserve holding at 4.75% while the Bank of England is at 4.50%, making the dollar more attractive. Recent UK inflation data, while down from its peak, remains sticky at 2.8%, complicating the BoE’s path forward as last quarter’s GDP showed a minor contraction.

Outlook And Trading Implications

Given the conflicting signals of stubborn inflation and stalling growth, we anticipate increased volatility in the pound over the coming weeks. Traders might consider buying volatility using options strategies ahead of the next BoE meeting. This could be a prudent way to position for a potential sharp move in either direction, as the market is clearly divided on the Bank’s next step. The underlying fundamentals suggest a continued bearish bias for the pound against the dollar. We see traders potentially building positions through put options to target levels below 1.2300, especially if upcoming UK retail sales data disappoints. Historically, periods of clear policy divergence between the Fed and the BoE have resulted in sustained trends, and the current environment appears to be another such case. Create your live VT Markets account and start trading now.

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