Swissie holds near records but Aussie tanks

As market sentiment begins to calm after yesterday’s massive risk sell-off, the swissie finds itself well supported near all-time highs against the greenback after surging more nearly 2% in overnight trade. As concerns about the slowing global economy continue to take root, the Swiss franc remains a haven play to investors seeking to reduce exposure to the European sovereign debt crisis. The USD/CHF broke below the 76.4% Fibonacci extension taken from the July 28th and August 4th crests at 0.7470 before finding solace just above the 100% extension at 0.7370. Interim support rests here with a break risking further losses for the greenback with little in the way of support until the 0.73-handle. Topside resistance holds at 0.7470, backed by the 0.75-figure and the 61.8% extension at 0.7530.

Key Levels/Indicators

Level/Indicator

Level

50-Day SMA

0.8222

20-Day SMA

0.7936

10-Day SMA

0.7728

2011 CHF High

0.7369

The Aussie continues to be battered as traders jettison higher-yielding growth assets for the safety of the swissie, the yen, and the greenback. Although the Australian dollar pared some of the steep losses seen yesterday, the pair was off 0.1% against the greenback at the start of North American trade after encountering interim resistance at the 23.6% Fibonacci retracement taken from the August 1st decline at the 1.02-handle. Markets are poised for today’s FOMC announcement will investors will be closely eyeing the Fed’s policy statement for clues as to the central bank’s economic growth outlook. An improvement in risk sentiment could fuel a relief rally in the Aussie, but the pair has already broken below some key technical levels, and a close above the 61.8% long-term Fibonacci extension taken from the 2008 and 2010 troughs at 1.0160, will be crucial if the Aussie is to embark on any type of sustained recovery. A break above interim resistance sees subsequent ceilings at the 1.03-handle, backed by the 38.2% retracement at 1.0370 and the 1.05-figure.

Key Levels/Indicators

Level/Indicator

Level

50-Day SMA

1.0671

20-Day SMA

1.0724

10-Day SMA

1.0678

2011 AUD High

1.1079

Michael Boutros, Currency Analyst for DailyFX.com is a Technical/Fundamental Analyst specializing in the FX markets. E-mail: mboutros@fxcm.com.

Twitter: @MBForex
WEB:
www.fxcm.com

About the Author
Michael Boutros Michael Boutros, Currency Analyst for DailyFX.com is a Technical/Fundamental Analyst specializing in the FX markets. E-mail: mboutros@fxcm.com.
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