Aussie rallies yen falls on German bailout vote

The Australian dollar is the top performer against a weaker greenback in North American trade, advancing 0.82% early in the session. News that the German parliament had successfully passed a vote to expand the European Financial Stability Fund (EFSF) saw a pick-up in risk as concerns of an imminent default in the region eased. Demand for higher yielding assets propped up the Aussie, which continues to consolidate within a triangle formation. Interim resistance stands at the upper-bound trendline with topside breach eyeing subsequent ceilings seen at the 76.4% Fibonacci extension taken from the July 28 and Sept. 1 crests at 0.9895, 0.9930 and the weekly high at 0.9980. Support rests at the 0.9800-figure backed by 0.9750 and the 97-handle. From a technical standpoint the longer-term outlook for the Aussie remains weighted to the downside with targets seen held as low as 0.9620.

Key Levels/Indicators

Level/Indicator

Level

100-Day SMA

1.0545

50-Day SMA

1.0448

20-Day SMA

1.0220

2011 AUD High

1.1079

The yen fell in early U.S. trade as demand for safe haven waned on news of the German vote with a decline of 0.29% against the greenback. The pair briefly broke above the 23.6% Fibonacci extension taken from the August 4th and September 9th crests at 76.80 to tag the 77-figure before quickly paring the gains. Market sentiment remains fragile however with a high probability of a rebound in risk aversion flows over the next few days. The yen is likely to remain range bound at these levels with interim support eyed at 76.60 and the lower bound trendline at 76.40. Resistance holds at the figure with a breach eyeing topside targets at 77.35 and 77.60. Traders will be eyeing a flurry of data out of Japan overnight, highlighted by the August jobless rate, household spending, and industrial production.

Key Levels/Indicators

Level/Indicator

Level

100-Day SMA

78.77

50-Day SMA

77.04

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.
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