Swiss Franc Rallies on Flight To Safety, New Zealand Dollar Hits Fresh Monthly Low

The Swiss Franc rallied across the board and is the best performing currency against the greenback on Wednesday, and the rise is safe-haven flows may push the low-yielding currency higher throughout the day as investors scale back their appetite for risk. The USDCHF is nearly 40pips lower on the day after moving only 69% of its average true range, and the exchange rate may push lower going into the Asian trade as market sentiment falters. At the same time, the dollar-franc looks poised to push lower over the near-term as the 50-Day SMA (1.0584) crosses below the 200-Day SMA at 1.0667, and the bearish crossover could lead the pair to retrace the advance from the beginning of the year, which would lead to a test of the January low at 1.0130.However, as the daily RSI approaches oversold territory, there could be a corrective retracement before we get another move to the downside, which could push price action back towards the 20-Day SMA at 1.0425.

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Upcoming Events

The New Zealand dollar extended the decline from the previous day and slipped to a fresh monthly low of 0.6948 following the flight to safety, but the high-yielding currency looks due for a corrective retracement as the 30-minute RSI pushes into oversold territory. The NZDUSD is 60+points lower from the open after moving 123% of its daily ATR, and we may see the pair fill-in the gap from the 120-SMA at 0.7042 once we see the relative strength index bounce back from its current lows. However, as risk sentiment continues to dictate price action in the foreign exchange market, the drop in risk appetite could drag on the kiwi-dollar throughout the day, and the pair may continue to retrace the June rally throughout the remainder of the week as investors turn increasingly cautious and move out of higher-yielding currencies.

Key Levels/Indicators

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To discuss this report contact David Song, Currency Analyst: dsong@fxcm.com