Dollar collapses as relief rally fuels swissie assault

The Swiss franc remained the top performer against the greenback for the third consecutive day, with a 1.33% advance against a weaker US dollar. Market sentiment seems to have improved after yesterday’s sharp sell-off, with equities moving into positive territory soon after the open. The dollar has come under extreme pressure early in North American trade with the Dow Jones FXCM Dollar Index (Ticker: US Dollar) paring all of the gains seen on the back of yesterday’s risk sell-off. Subsequently the greenback has fallen against all its major counterparts, the swissie leading the assault. However markets are likely to drift into the close as traders take to the sidelines amid thinned weekend trade. The USD/CHF pair briefly tagged the 61.8% Fibonacci retracement taken from the July 19th descent at 0.7814 where interim support now rests. A break below this level sees subsequent floors at 0.7770, 0.7730 and the 50% retracement at 0.7670. Interim resistance holds at 0.7950, backed by the 76.4% retracement at the 0.80-figure and 0.8045.

Key Levels/Indicators

Level/Indicator

Level

50-Day SMA

0.8111

20-Day SMA

0.7763

10-Day SMA

0.7685

2011 CHF High

0.7078

The kiwi saw the smallest gains among the majors an hour into US trade with the high yielder advancing just 0.29% against the greenback. The NSD/USD pair encountered strong resistance at the 38.2% Fibonacci extension taken from the June 16th and August 8th troughs at 0.8288 before sharply reversing back the 0.8240 level where interim support now rests. With equities continuing to pare some of the steep declines seen yesterday, the kiwi should remain well supported with a breach of the 38.2% extension eyeing topside targets at the 0.8320, 0.8340 and the 50% extension at 0.8390. A break below 0.8240 sees subsequent floors at the 0.82-figure, the 23.6% extension at 0.8165, and 0.8130.

Key Levels/Indicators

Level/Indicator

Level

50-Day SMA

0.8348

20-Day SMA

0.8460

10-Day SMA

0.8283

2011 NZD High

0.8842

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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