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Kiwi Surges as Risk Returns- Swiss Franc in Consolidation

By , Currency Strategist
22 August 2011 14:34 GMT

Daily Winners and Losers

Kiwi_Surges_as_Risk_Returns-_Swiss_Franc_in_Consolidation_body_Picture_2.png, Kiwi Surges as Risk Returns- Swiss Franc in Consolidation

Kiwi_Surges_as_Risk_Returns-_Swiss_Franc_in_Consolidation_body_Picture_3.png, Kiwi Surges as Risk Returns- Swiss Franc in Consolidation

Kiwi_Surges_as_Risk_Returns-_Swiss_Franc_in_Consolidation_body_Picture_4.png, Kiwi Surges as Risk Returns- Swiss Franc in Consolidation

The New Zealand Dollar tops the performance chart an hour into North American trade, with the kiwi advancing more than 0.9% against the greenback. As equity markets get a reprieve from the heavy selling pressure seen in recent days, the kiwi has found itself outperforming the majors as traders go back on the hunt for yields. The NZD/USD pair held above the 23.6% Fibonacci extensions taken from the June 16th and August 8th troughs at 0.8160. Interim support for the pair rests at the 0.8230 with subsequent floors seen at the 0.82-figure and 0.8160. Topside resistance is seen at the 38.2% extension at 0.8285 with a breach eyeing targets at 0.8340 and just below the 50% extension at 0.8380.

Key Levels/Indicators

Level/Indicator

Level

50-Day SMA

0.8111

20-Day SMA

0.7763

10-Day SMA

0.7685

2011 CHF High

0.7078

Kiwi_Surges_as_Risk_Returns-_Swiss_Franc_in_Consolidation_body_Picture_5.png, Kiwi Surges as Risk Returns- Swiss Franc in Consolidation

Kiwi_Surges_as_Risk_Returns-_Swiss_Franc_in_Consolidation_body_Picture_6.png, Kiwi Surges as Risk Returns- Swiss Franc in Consolidation

The Swiss franc is the worst performer early in the session, sliding nearly 0.5% against the dollar as investors jettisoned the lower yielding majors like the dollar, the yen, and the swissie. The USD/CHF pair has continued to trade between the 61.8% and 76.4% Fibonacci retracement taken from the July 19th descent at 0.7820 and the 0.80-figure respectively as it consolidates within a wedge formation. Concerns over a possible Swiss-euro peg have all but dissipated after SNB Vice President Thomas Jordan shocked investors with the threat nearly 2 weeks ago. And with investor appetite picking up early in the week, the pair is likely to remain well supported so far as broader market sentiment remains on the rebound. A clear breach above the 0.7880 level eyes topside targets at 0.7960 and the 76.4% Fib retracement at 0.7990. Interim support holds at 0.7820, with subsequent floors seen lower at 0.7770, 0.7730, and the 50% retracement at 0.7675. With the US light on economic data this week, traders will be eyeing prints out of Switzerland with trade balance figures on tap overnight.

Key Levels/Indicators

Level/Indicator

Level

50-Day SMA

0.8348

20-Day SMA

0.8460

10-Day SMA

0.8283

2011 NZD High

0.8842

Upcoming Events

Date

GMT

Release

Expected

Actual

8/23

6:00

Trade Balance (Swiss franc) (JUL)

-

1.74B

8/23

6:00

Exports (MoM) (JUL)

-2.5%

5.2%

8/23

6:00

Imports (MoM) (JUL)

-

2.5%

Written by Michael Boutros, Currency Analyst for DailyFX.com

To contact the author of this report or receive his daily reports, please send inquiries to:mboutros@dailyfx.com

You can also follow Michael on Twitter @MBForex.

DailyFX provides forex news and technical analysis on the trends that influence the global currency markets.
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22 August 2011 14:34 GMT