The dollar fell slightly against most of its G10 counterparts during the European morning with the GBP and CHF being the biggest winners. The Swiss franc registered the biggest gains against the greenback, recovering all yesterday’s losses, mainly due to safe-haven inflows in response to US and EU political problems. I believe that the USD/CHF will continue its tumble in the near term, given the problems with the US debt ceiling and the possibility that the Italian government could collapse. The GBP/USD surged higher posting a weekly high after BoE Governor Mark Carney stated that he sees no need for further quantitative easing (QE). On the other hand, the AUD experienced the biggest losses against the dollar while it continued heading lower for a 3rd consecutive day ahead of the RBA Tuesday’s policy meeting. In Norway, the unemployment rate fell in August to 2.6% from 2.8%, coming in line with estimations. The USD/NOK was rising steadily in the morning ahead of the announcement, but it reversed course and started falling 5 minutes ahead of the data and then plunged at the time of the release. However, soon afterwards the pair recovered.
USD/CHF has been moving in a short term trading range between the key support at 0.9076 (S1) and key resistance at 0.9128 (R1) for about 10 days. During the European morning, the pair moved lower and in the early afternoon European time is testing the lower boundary of the sideways formation. A clear dip below that barrier will signal the end of the price’s consolidative mood and will turn the bias back to the downside. The negative short-term studies support the notion. The MACD oscillator achieved a cross below both its zero and trigger lines, while the price is trading below the 20-hour moving average and are riding the lower Bollinger band. On the longer timeframes the USD/CHF holds a downward path since May 2013. It worth mentioning that the last time we observed a daily close below the 0.9076 (S1) was back in April 2012.
• Support levels are identified at 0.9076 (S1), followed by 0.9000 (S2) and 0.8924 (S3). The latter two are found from the weekly chart.
• Resistance is at 0.9128 (R1), followed by 0.9168 (R2) and 0.9228 (R3) respectively.
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