Weak Retail Sales Derail Dollar Rally- Swissie Surges on Euro Strength

Daily Winners and Losers

The Swiss Franc is the top performing currency against the greenback at 1pm in New York, with the USD/CHF off by more than 1.2% on the session. Weaker than expected advanced retails sales and weekly jobless claims snapped a run of stronger than expected economic data from the US, with the dollar falling against all its major counterparts, save the kiwi. The franc has continued to weigh on the dollar as the euro advanced against all its major counterparts save the franc. Since the 1.20 EUR/CHF peg was put into effect on September 6th, the USD/CHF to EUR/USD correlation has held at -0.90 with the inverse relationship continuing to weigh on the dollar as the euro advances.

The USD/CHF broke below key support at the 38.2% Fibonacci extension taken from the December 15th and January 8th crests at 0.9475 before encountering soft support at the 0.9420 level. A breach here eyes subsequent floors at the 61.8% extension at the 0.94-figure, 0.9380, and the 76.4% extension at 0.9355. Topside resistance is now eyed at 0.9340 backed by the 38.2% extension at 0.9475 and the 0.95-handle. Watch for the swissie to remain well supported as the euro advances, with a reversal in the single currency likely to see the dollar mount a counteroffensive here.

Key Levels/Indicators

The New Zealand dollar is the weakest performing currency in afternoon trade with the NZD/USD off by 0.44% on the session. The kiwi which has outperformed its major counterparts over the past few sessions pared a portion of its recent advance, with the pair finding solace around the 61.8% Fibonacci extension taken from the December 29th and January 8th troughs at 0.7930 after failing two breach attempts above 0.7980. Subsequent support targets are held at the 50% extension at the 0.79-figure, and the 38.2% extension at 0.7870. The kiwi has continued to trade within the confines of an ascending channel formation dating back to the 15th of December with a break below the channel support targeting the 23.6% extension at 0.7835 and the 0.78-handle.Topside resistance holds at 0.7980 backed by the 0.80-handle.

Key Levels/Indicators

---Written by Michael Boutros, Currency Analyst with DailyFX.com

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