Mid-Week Technical Outlook: Safe Haven Currencies

The mood across financial markets turned gloomy on Wednesday as disappointing data from China fuelled fears about slowing global economic growth.

European equities were mixed amid the risk-off sentiment while safe-haven currencies appreciated as investors rushed to safety. Generally, safe-haven currencies like the USD, CHF, JPY, and to a lesser degree even EUR are expected to shine during periods of uncertainty. However, their status tends to be tested thanks to shifting market dynamics and developments at home. Our focus today falls on safe-haven currencies with the tool of choice being nothing but technical analysis.

Euro bulls are certainly on a roll today. We can see a similar theme with the Swiss franc which has gained against most of its counterparts. However, the USD is showing a mixed performance, while the Japanese Yen seems to be getting no love at all.

Equally weighted USD technical bounce?

After dipping below the 200-day SMA last week, the equally-weighted USD index has experienced a rebound back toward 1.1950. A strong daily close above this point could threaten the current bearish channel with the next key level found at 1.2184 – a point below the 100-day SMA. Should 1.1950 prove to be reliable resistance, prices may decline back towards 1.1740.

Equally weighted EUR remains bullish

As the subtitle says, FXTM’s equally weighted Euro index remains bullish on the daily charts. There have been consistently higher highs and higher lows while prices are trading above the MACD. A strong breakout and daily close above 1.26650 could open the doors towards 1.2740. If prices dip back below 1.2550, the next level of interest can be found at 1.2400.

EURJPY hits 50-day SMA

The EURJPY may be back on the rise after support was found above the 100-day SMA. Prices remain in a bullish trend despite periods of weakness with bulls breaking above 144.00. If the upside gains momentum, the next key level of interest can be found at 145.60. If bears re-enter the scene, the EURJPY could descend back towards 141.50.

USDCHF eyes 0.9350

Bears remain in control on the daily charts as there have been consistently lower lows and lower highs. Prices are approaching the 0.9350 support level as of writing. A strong break below this point could trigger a selloff towards 0.9300. Alternatively, a move back above 0.9430 could signal a rally toward 0.9550. 

JPY Index back below 100-day SMA

The Japanese Yen index remains choppy and trapped within a pretty wide range on the daily charts with support at 80.15 and resistance at 84.00. Prices are trading below the 100-day SMA and currently balancing above 82.20 as of writing. Weakness below this point could encourage a decline toward 81.30 and 80.15, respectively. A rebound may open a path back towards 83.00 and beyond.

USD USDCHF JPY Euro