Currencies in a lull despite equity volatility

Today’s winners and losers see yesterday’s report reversed with the Swiss franc outperforming the majors, advancing 0.48% against the greenback in early North American trade. The USD/CHF saw a topside break of the wedge formation dating back to August 17th before paring all the gains back to the 0.7880 mark. This level continues to be an area of congestion for the pair with a break below the former resistance trendline eying targets at 0.7840 and the 61.8% Fibonacci retracement taken from the July 19th descent at 0.7818. Subsequent floors are seen at 0.7770 and the 0.77-figure. Topside interim resistance holds at 0.7940 backed by 0.7960 and the 76.4% retracement at 0.7990. Note that despite volatile swings in the equity markets, currencies have remained rather subdued, with traders eagerly anticipating Friday’s Jackson Hole Economic Policy Symposium.

Key Levels/Indicators

Level/Indicator

Level

50-Day SMA

0.8350

20-Day SMA

0.8418

10-Day SMA

0.8275

2011 NZD High

0.8842

The kiwi is on the defensive early in the session, with the NZD/USD pair sliding nearly 0.70%. The pair briefly broke above the 0.8340 interim resistance level overnight before settling around the 38.2% Fibonacci extension taken from the June 16th and August 8th troughs at 0.8285. However as risk sentiment continues to improve and equity markets move higher, the kiwi is likely to be well supported here with a break of interim resistance eyeing targets at 1.08360 and the 50% extension at 0.8390. A break below the 0.8280 risks further losses for the high yielder with subsequent floors seen at 0.8230 and the 23.6% extension at 0.8160.

Key Levels/Indicators

Level/Indicator

Level

50-Day SMA

0.8091

20-Day SMA

0.7750

10-Day SMA

0.7791

2011 CHF High

0.7078

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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