It looks like position-squaring ahead of the weekend was dominating the FX market Friday morning in Europe as there were no major indicators to determine direction. The dollar was unchanged (AUD, GBP) to lower against all the other G10 currencies compared with its opening levels. The biggest gainer this morning was NOK, one of the biggest losers on the week (-1.4% vs USD compared with last Friday as of this morning’s opening in Europe). CHF gained more than JPY, which is probably being depressed by the improved risk sentiment – all the major European bourses except Spain are higher this morning and S&P 500 futures are up a bit further even after yesterday’s sharp rise. The U of Michigan consumer sentiment survey for October, due out later today, may give some direction to the market but who would be surprised by a fall in sentiment now? Even I’m depressed about what’s going on in the US and I live in Europe!
USD/CHF has been moving in an uptrend since the 3rd of October. However, during the last trading hours the pair fell sharply, breaking below the 0.9095 support (current resistance) and signaled the completion of a two-day head and shoulders reversal formation. At the time of writing the rate is testing the 0.9075 (S1) support barrier which coincides with the 200-hour moving average reading. A decisive violation below the aforementioned key level will have larger bearish implication and would target the blue uptrend line and the 0.9060 (S2) floor. Short term studies favor such a break, since the MACD and the RSI both follow downward paths.
Support: 0.9075 (S1), 0.9060 (S2), 0.9044 (S3)
Resistance: 0..9095 (R1), 0.9129 (R2), 0.9147 (R3)
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