FX Board: USD technical bounce — Kiwi unhinged
Key developments in FX today
- The USD rebounded from very technical levels today, including an exact test of the 61.8% Fibo in EURUSD near 1.1420 and from the 0.7500 level in AUDUSD. The rebound was fairly broad. Elsewhere the action was somewhat muted, with the exception of the Swiss Franc and Japanese yen picking up more strength across the board on a weakening of risk appetite and the kiwi absolutely soaring as the Reserve Bank of New Zealand failed to cut and apparently waxed a bit less dovish in its forward guidance than the market was expecting.
- Precious metals failed to punch through the key bull/bear lines - the respective 61.8% Fibo retracements of the recent selloff. Below these levels ($12,65/oz-ish in gold and $17.15-25/oz in silver) and the bears have an argument, with confirmation on a fresh, steep selloff, while bulls will want these levels quickly taken out to take the focus back higher toward the cycle tops and beyond.
Euro weakness was as much a driver here as USD strength, as EURCHF was lower still and EURJPY in particularly was punished on the day.
From here, the bears have a nominal case if we remain below the key retracements, with 1.1300 as the first downside objective and perhaps 1.1225/00 as the downside pivot zone.
EURUSD downside case nearing key point at 1.1300
Note, however, that most of the previous steep sell-offs in USDCHF have quickly come to an end once evidence of buying materialises.
Will the USDCHF selloff follow previous patterns?
From here, resistance looks like 0.7180 to start and the beleagured bears can only build a case if we push back down through that 0.7050/00 zone to indicate this was merely a short squeeze, rather than the start of a bigger rally building.
NZDUSD rips through the 0.71 area