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Dollar Climbs as Global Risk Sell-Off Resumes- Kiwi Downgrade Weighs

By , Currency Strategist
30 September 2011 09:32 GMT

Daily Winners and Losers

Dollar_Climbs_as_Global_Risk_Sell-Off_Resumes-_Kiwi_Downgrade_Weighs__body_Picture_2.png, Dollar Climbs as Global Risk Sell-Off Resumes- Kiwi Downgrade Weighs

Dollar_Climbs_as_Global_Risk_Sell-Off_Resumes-_Kiwi_Downgrade_Weighs__body_Picture_3.png, Dollar Climbs as Global Risk Sell-Off Resumes- Kiwi Downgrade Weighs

Dollar_Climbs_as_Global_Risk_Sell-Off_Resumes-_Kiwi_Downgrade_Weighs__body_Picture_4.png, Dollar Climbs as Global Risk Sell-Off Resumes- Kiwi Downgrade Weighs

The yen was the best performer among the majors with the USD/JPY holding within its recent range between 76.40 support level and the 23.6% Fibonacci extension taken from the August 4th and September 9th crests at 76.80. With European equity markets in a sea of red early in the session, demand for haven assets has kept the yen well supported as investors seek refuge from global risk sell-off. However comments made by Japanese Finance Minister Jun Azumi may limit yen advances after he cited that the government would boost its currency intervention fund by 15 trillion yen ($195 billion). A break above the 23.6% extension exposes topside target at the 77-figure and 77.35, with subsequent support levels lower at the 38.2% Fibonacci extension at 76.20 and the 76-handle.

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

Dollar_Climbs_as_Global_Risk_Sell-Off_Resumes-_Kiwi_Downgrade_Weighs__body_Picture_5.png, Dollar Climbs as Global Risk Sell-Off Resumes- Kiwi Downgrade Weighs

Dollar_Climbs_as_Global_Risk_Sell-Off_Resumes-_Kiwi_Downgrade_Weighs__body_Picture_6.png, Dollar Climbs as Global Risk Sell-Off Resumes- Kiwi Downgrade Weighs

The New Zealand Dollar is the worst performer against a stronger greenback early in European trade with the pair off by more than 1%.

The kiwi, which has been the topic of multiple scalp reports this week, continues to trade within a descending channel formation dating back to the 27th when we first initiated our USD/NZD scalp. News that both Fitch and S&P had lowered New Zealand’s sovereign debt ratings continues to weigh on the kiwi despite a much stronger than expected print on August building permits overnight. With risk aversion trades dominating the session the kiwi is likely to remain under pressure with interim support eyed at the convergence of the lower bound trendline and the 0.7620 support level with subsequent floors seen at 0.7580 and 0.7560. Interim resistance now stands at 0.7650 backed by 0.7680 and 0.7710. For the updated NZD/USD scalp levels click here.

Key Levels/Indicators

Level/Indicator

Level

100-Day SMA

0.8240

50-Day SMA

0.8291

20-Day SMA

0.8069

2011 JPY High

0.8842

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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30 September 2011 09:32 GMT