What do the Techs Tell Us?

Poor payroll numbers in the US, the Christian Democratic Union (CDU) defeat in Germany, a return to higher yields in Italy and a touch of intervention from the Swiss have left behind another dull few days in the international financial markets.

The first points of interest are euro/US dollar (ref 1.4090) and pound/US dollar (ref 1.6000), which both failed to hold on to the short-term gains yesterday (6 September) following the US dollar/Swiss france appreciation party of approximately 9%. They are now sitting towards the bottom of the ranges that have been in place for a number of months. With euro/pound (ref 0.8805) in mid-range, trapped between 0.8746-32 below and 0.8840-50 above, it looks for now that the pound/US dollar fortunes remain in the hands of the euro. The key levels in the euro/US dollar short term are at 1.3920 below and 1.4165-75 above. Trading below the former leaves the door ajar for another sharp leg lower, while holding above the latter reduces the short term pressure and keeps the market in the range. In pound/US dollar a more serious breakdown takes place below 1.5800-1.5795.

Elsewhere US dollar/yen (ref 77.20) put in a wider range than in recent sessions as hopes/concerns of intervention came to the forefront and prices moved higher. The lack of Bank of Japan (BoJ) involvement has been followed by the market drifting lower in early London hours (7 September). By holding above 7690-85, the chance of further attempts higher remain.

Finally, Australian dollar/US dollar (ref 1.0610), following the recovery from the recent sharp test lower, adds to the positive slant on a break above 1.0700-25. The recovery would come into question back beneath 1.0480.

Figure 1: Currency Fluctuations

Source: CQG

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