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By Sebastian Usher
BBC Middle East analyst
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The truce announcement by the two militant Palestinian groups Hamas and Islamic Jihad and Yasser Arafat's Fatah faction came as Israel began withdrawing from the northern Gaza Strip.
Palestinians are under pressure to make the truce hold
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So, is there a new momentum for the Middle East peace process - and will the hopes now raised last any longer than they have in the past?
The American peace plan stands or falls on whether the 33-month cycle of tit-for-tat violence between Israelis and Palestinians can be halted.
All the other peace plans of recent years have collapsed in the face of mutual violence.
This time, negotiations have been pursued on two simultaneous tracks.
One track has been on a partial Israeli withdrawal from the Gaza Strip.
To agree to this, Israel demanded guarantees that the Palestinian Authority could ensure security after its forces had pulled out.
Peace progress
The Palestinian leadership is unable to force the militant groups to stop their attacks.
Only if the groups themselves signed up to a truce could the Israeli withdrawal begin.
That is what the second track of negotiations was about. Now, there has been clear progress on both sides.
The main militant groups have declared their ceasefire - albeit for three to six months.
Israel, meanwhile, pulled its troops out of northern Gaza on Sunday night.
There is no doubt that the current visit by the US National Security Adviser, Condoleezza Rice, spurred both decisions.
Her trip is a sign that the Americans are committed to following through on the peace plan, known as the roadmap.
Mutual suspicion
Neither side wanted to look as if it was the obstacle.
But each remains sceptical about the other's motives.
The Israelis have already dismissed the militants' ceasefire as a worthless tactical ploy, while the Palestinians say the partial Israeli withdrawal does not go anywhere near far enough.
Those tensions are mirrored by similar stresses within each society.
The usually hawkish Israeli Prime Minister, Ariel Sharon, and his recently appointed Palestinian counterpart, Mahmoud Abbas - also known as Abu Mazen - both face domestic criticism for offering too many concessions.
The political pressure on each man not to be seen to be doing the other's bidding is intense.
And the shadow of violence hangs over every step they take.
A Palestinian suicide bomb or an Israeli attack on a militant leader could shatter the fragile balance at any time.