Dollar slides as risk currencies climb amid thin trading

The kiwi is the top performer an hour into US trade, advancing more than 0.62% against the greenback early in the session. The gains come on the back of improved risk appetite as investors sound a sigh of relief after hurricane Irene dodged New York City on its rampage up the northeast seaboard. Still, with transit systems in the city closed today, trade volume may be thinned and accordingly equities could see increased volatility with any substantial moves likely to lack conviction. The NZD/USD pair breached interim resistance at 0.8420 in overnight trade before finding solace at the 0.8460 level. A topside break eyes targets at the 61.8% Fibonacci extension taken from the June 16th and August 8th troughs at 0.8490 backed by 0.8540 and 0.8580. Interim support rests at 0.8420 with subsequent floors eyed lower at the 50% extension at 0.8390 and 0.8345.

Key Levels/Indicators

Level/Indicator

Level

50-Day SMA

0.8373

20-Day SMA

0.8341

10-Day SMA

0.8310

2011 NZD High

0.8841

The Swiss franc remains the weakest performer, sliding 1.86% against a weaker dollar before paring some of the losses early in North American trade. With reports of possible bank mergers in Greece and ongoing rhetoric from European leaders attempting to talk down speculation of further contagion, concerns regarding the sovereign debt crisis have eased in the interim with traders going back on the hunt for yields early in the week. The USD/CHF pair saw a breach of the 0.8185 resistance level early in the session with the breakout seeming to lack much follow through. Again we note with lighter volume its likely markets will witness some corrective breakouts, with the kiwi quickly pulling back to the 0.8185 mark. A break back below this level sees interim targets at the 0.81-figure backed by 0.8045 and the 76.4% Fibonacci retracement taken from the July 19th decline at the 0.80-handle. A continued topside moves eye the 100% retracement at 0.8275 backed closely by the 0.83-figure.

Key Levels/Indicators

Level/Indicator

Level

50-Day SMA

0.8056

20-Day SMA

0.7774

10-Day SMA

0.7964

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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