US dollar under pressure as kiwi advances

The kiwi is the top performer against a weaker dollar 2 hours into North American trade with the pair advancing 1.6% early in the session. As risk appetite continues to improve on speculation that European officials are in the works to create a ‘TARP’ like special purpose vehicle, higher yielding growth backed currencies have gone back on the offensive, with the kiwi outperforming the majors as the dollar pares recent gains. The NZD/USD broke above the 76.4% Fibonacci extension taken from the August 1st and 31st crests at 0.7890 where interim support now rests. A break back below this level eyes subsequent floors at the 0.78-figure and the 100% extension at 7680. Topside targets are held at 0.7950, backed by the 61.8% extension at 0.8020 and the 0.81-handle.

Key Levels/Indicators

Level/Indicator

Level

100-Day SMA

0.8246

50-Day SMA

0.8346

20-Day SMA

0.8192

2011 NZD High

0.8842

The yen remains under pressure as demand for safe haven subsides with the USD/JPY advancing more than 0.30% in early US trade. The pair broke above the 76.55 level before tagging interim resistance at the 76.70 mark. A topside break here eyes targets at the 23.6% Fibonacci extension taken from the August 4th and September 9th crests at 76.80, and the 77-figure. Interim support rests at 76.55 with subsequent floors seen at 76.40 and the 38.2% extension at 76.20. Topside gains are likely to be limited as the dollar remains under pressure and RSI peaks into overbought territory. A pullback is likely with the pair expected to hold its recent range until a substantial shift in sentiment sees a more pronounced topside breach.

Key Levels/Indicators

Level/Indicator

Level

100-Day SMA

78.86

50-Day SMA

77.11

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:
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.

Twitter: @MBForex
WEB: www.DailyFX.com

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