Aussie rebound to be short lived

The Australian dollar is the top performer against a weaker greenback as risk appetite gets a reprieve from the heavy selling pressure seen over the past few sessions. The aussie advanced more than 0.80% after moving a full 115% of its daily average true range. The AUD/USD pair continues to range between the 0.97-figure and the 76.4% Fibonacci extension taken from July 27th and September 1st crests at 0.9865. Interim resistance holds here with subsequent ceilings eyed at parity and the 61.8% extension at 1.0040. Strong support rests with the 0.97-handle with a break eyeing downside targets eyed at the 0.9650 and the 100% extension just below the 0.96-figure. The rebound in risk is likely to be short lived and the aussie may continue to hold this range into the close of North American trade. With concerns about global growth and a possible double dip recession taking root, the aussie remains vulnerable to shifts in risk appetite with the high-yielding currency taking the brunt of the losses on risk aversion flows.

Key Levels/Indicators

Level/Indicator

Level

100-Day SMA

1.0582

50-Day SMA

1.0520

20-Day SMA

1.0392

2011 AUD High

1.1079

The yen was the worst performer against the dollar with a modest gain of just 0.6% an hour into US trade. The USD/JPY pair continues to hold above the 38.2% Fibonacci taken from the August 4th and September 9th crests at 76.20 with a break below eyeing targets at the 76-figure and the 50% extension at 75.70. Topside resistance now stands at 76.40 with subsequent ceilings eyed at 76.60 and the 23.6% extension at 76.80. Yen volatility is likely to remain subdued heading into the weekend as investors take caution of possible BoJ intervention as the yen continues to advance. Japanese officials have repeatedly cited concerns over the currency’s rapid appreciation and remain poised to act as a stronger yen weighs on the export driven economy. But in light of the sharp declines seen in equities over the past few session and concerns about the ongoing debt crisis in Europe continue to mount, the yen is likely to remain well supported as traders seek refuge in the low yielding “haven” yen.

Key Levels/Indicators

Level/Indicator

Level

100-Day SMA

78.94

50-Day SMA

77.21

20-Day SMA

76.83

2011 JPY High

75.94

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:
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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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