Yen advances on lack of conviction

The Japanese yen tops the performance charts against the greenback in early North American trade with an advance of 0.47%. The dollar is mixed at the open with the yen and the euro continuing to mount their assault on the greenback as equity markets remain supported on hopes that European officials will avert further debt contagion in the region. The USDJPY pair dipped below the 76.55 interim support level overnight before finding solace above trendline support. Market sentiment remains fragile however with a rebound in the dollar likely over the next few days. Interim topside resistance is held at 76.55 backed by 76.70 and the 23.6% Fibonacci extension taken from the August 4th and September 9th crests at 76.80. A break below trendline support exposes the 38.2% extension at 76.20 and the 76-figure. Look for intervention concerns to be rekindled should yen strength persist to these levels. Overnight trader will be eying data out of Japan with August retail trade figures and large retail sales on tap.

Key Levels/Indicators

The Canadian dollar is the weakest of the majors against the greenback, sliding more than 0.35% in early US trade. The pair continues to trade within a tight range between the 23.6% Fibonacci retracement taken from the September 16th advance at 1.0240 and the 1.02-figure. If risk appetite trails off as we expect, look for the dollar to push higher with topside breach eyeing targets eyed at 1.0270, 1.0320, and 1.0370. A break below interim support sees subsequent floors at the 38.2% retracement at 1.0150, the 50% retracement at 1.0080, and the 61.8% retracement just above parity.

Key Levels/Indicators

Michael Boutros, Currency Analyst for DailyFX.com is a Technical/Fundamental Analyst specializing in the FX markets. E-mail: mboutros@fxcm.com.

Twitter: @MBForex
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