Yen withstands dollar strength, kiwi suffers

Daily FX winners and losers

The Japanese yen is the top performer against a modestly stronger greenback at the open with a gain of 0.24%. Although the dollar has gotten a reprieve from yesterday’s massive sell-off, the yen continues to put pressure on the greenback with the pair holding just above the 100% Fibonacci extension taken from the Sept. 9 and Oct. 12 crests at 75.70. The pair made record lows yesterday at 75.65 before quickly pulling back above 75.70. Intervention concerns continue to circulate as BoJ rhetoric picks up with officials noting that rapid appreciation in the yen will be addressed if excessive speciation persists. Regardless, it’s likely that investors will once again test the resolve of the central bank with expectations for some form of intervention mounting. A break here sees another test of all-time lows with the 75.50 mark expected to provide some form of support. Interim resistance stands at 75.90 with subsequent ceiling seen at the 76.4% extension at 76.13 and the 61.8% extension at 76.40.

Key Levels/Indicators

The kiwi is the worst performer an hour into U.S. trade after stocks opened on a softer note and traders booked profits ahead of the weekend. The NZD/USD is expected to hold its recent range into the weekend with resistance at 0.8200 backed by the 50% Fibonacci extension taken from the Oct. 4 and Oct. 26 troughs at 0.8236, and 0.8260. Interim support holds at the 38.2% extension at 0.8160 backed by the 0.81-figure and the 23.6% extension at 0.8070. Longer-term outlooks for the kiwi are weighted to the topside after the Reserve Bank of New Zealand sounded increasingly hawkish remarks at the last interest rate decision with Credit Suisse overnight swaps now factoring in 43 basis points in rate hikes for the next twelve months.

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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