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NZD Advances as Traders Seek Yields, CHF Reversal Gathers Pace

NZD Advances as Traders Seek Yields, CHF Reversal Gathers Pace

2012-03-01 18:38:00
Michael Boutros, Strategist
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Daily Winners and Losers

New_document_1NZD_Advances_as_Traders_Seek_Yields_CHF_Reversal_Gathers_Pace_body_Picture_6.png, NZD Advances as Traders Seek Yields, CHF Reversal Gathers PaceNew_document_1NZD_Advances_as_Traders_Seek_Yields_CHF_Reversal_Gathers_Pace_body_Picture_5.png, NZD Advances as Traders Seek Yields, CHF Reversal Gathers PaceNew_document_1NZD_Advances_as_Traders_Seek_Yields_CHF_Reversal_Gathers_Pace_body_Picture_4.png, NZD Advances as Traders Seek Yields, CHF Reversal Gathers Pace

The New Zealand dollar is the strongest performer against a weaker dollar in US trade with an advance of 0.52% on the session. Risk appetite returned to markets today after yesterday’s sell-off prompted by Bernanke’s testemony before the house saw the kiwi test critical support at the confluence channel support dating back to December 15th and the 123.6% Fibonacci extension taken from the October 4th and November 25th troughs at 8325. This level remains paramount for the kiwi with a break below risking a substantial correction in the high yeilder.

New_document_1NZD_Advances_as_Traders_Seek_Yields_CHF_Reversal_Gathers_Pace_body_Picture_3.png, NZD Advances as Traders Seek Yields, CHF Reversal Gathers Pace

Interim support rests with the 61.8% Fibonacci extension taken from the February 16th and 22nd troughs at 8375 backed by the 50% extension at 8354 and the 38.2% extension at 8330. A break below 8320 eyes subsequent support targets at the 23.6% extension at 8305 and 8280. Topside resistance stands at the convergence of former channel support and the 78.6% extension at 8406 with subsequent ceilings seen at 8430, the 100% extension at 8445 and the 2012 high at 8470. Look for the kiwi to continue tracking broader risk trends with a shift into risk aversion likely to weigh on the pair.

Key Levels/Indicators

Level/Indicator

Level

200-Day SMA

0.8091

100-Day SMA

0.7954

50-Day SMA

0.8120

2011 NZD High

0.8842

New_document_1NZD_Advances_as_Traders_Seek_Yields_CHF_Reversal_Gathers_Pace_body_Picture_2.png, NZD Advances as Traders Seek Yields, CHF Reversal Gathers PaceNew_document_1NZD_Advances_as_Traders_Seek_Yields_CHF_Reversal_Gathers_Pace_body_Picture_1.png, NZD Advances as Traders Seek Yields, CHF Reversal Gathers Pace

The Swiss franc is the weakest performer for a second consecutive session with the USDCHF pair advancing 0.13% despite broader dollar weakness. As noted in yesterday’s Winners/Losers report, euro weakness continues to weigh on the swissie as the SNB remains steadfast with its pledge to hold the euro-Swiss peg at 1.20. The USDCHF continues to trade within a short-term ascending channel formation with interim resistance eyed at the 38.2% Fibonacci retracement taken from the February 16th decline at 9070. Subsequent topside targets are eyed at 9090 and the 50% retracement at 9115. A break below channel support eyes subsequent floors at the 23.6% retracement at 9017 backed by soft support at the figure and 8975. Look for the swissie to remain under pressure (USDCHF higher) so long as the euro continues to trend lower with a break below the 1.33-handle in EURUSD likely to fuel further weakness in the franc.

Key Levels/Indicators

Level/Indicator

Level

200-Day SMA

0.9170

100-Day SMA

0.9259

50-Day SMA

0.9110

2011 CHF High

0.7069

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

To contact Michael email mboutros@dailyfx.com or follow him on Twitter @MBForex

To be added to Michael’s distribution list, send an email with the subject line “Distribution List”

DailyFX provides forex news and technical analysis on the trends that influence the global currency markets.

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