USD/CHF Outlook April 23-27

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USD/CHF lost ground at the end of the trading week , closing at the 0.9085 level. The upcoming week is a quiet one, with only three releases. Here is an outlook for the Swiss events, and an updated technical analysis for USD/CHF.

After drifting for much of the week, the Swiss franc managed a short rally on Friday against the US dollar. This was in response to three key indicators in the US performing well below the market forecast, most importantly, US Unemployment Claims, which disappointed the markets for the second week in a row.  Will the swissie continue to improve this week?

Updates: There are no Swiss economic releases until Tuesday. USD/CHF is  in a narrow range, as the pair is trading at 0.9154. Trade Balance plunged in March, declining to a surplus of 1.69B. The weak reading caught the markets off guard, as the forecast had predicted a surplus of 2.59B. The Consumption Indicator sparkled, climbing to 1.22. This marked the first time the indicator has been above the 1.0 level since August 2011. USD/CHF has dropped slightly, trading below the 0.91 level, at 0.9091. The markets are waiting for the release of the KOF Economic Barometer later in the week. The forecast calls for a reading of 0.26, which would be the highest figure since last November. USD/CHF  did not react to the Fed announcement to maintain low interests rates, and is trading at 0.9098.

USD/CHF daily graph with support and resistance lines on it. Click to enlarge:  

  1. Trade Balance: Tuesday, 6:00. Trade Balance recorded a surplus of 2.68B in March, easily surpassing the market forecast of 1.97B. These were the indicator’s best figures since December 2011. The market is maintaining its forecast, calling for a reading of 1.99B for April. Will the indicator again surprise the markets?
  2. UBS Consumption Indicator: Tuesday, 6:00. This important consumer indicator has not been above the 1.0 level since August 2011. The March reading failed to inspire confidence in the markets, coming in at 0.87.
  3. KOF Economic Barometer: Friday, 7:00. After two straight readings in negative territory, the index managed to climb above zero in March, posting a very modest reading of 0.08. Another reading in positive territory this month would be bullish for the Swiss franc.

*All times are GMT

USD/CHF Technical Analysis

USD/CHF opened at 0.9218, and reached a high of 0.9251, climbing a touch above the resistance line at 0.9250 ( discussed last week). The pair ended the week by dropping to a low of 0.9085, and closed at 0.9083.

Technical lines from top to bottom:

We begin with resistance just above the round number of 0.95, at 0.9510. This line was last tested in January. Below, is the resistance line of 0.9412. Next is 0.9317, which was tested in mid-March but continues to provide strong resistance to USD/CHF. This is followed by resistance at 0.9250, which was the high of the week for the pair.

Close by, 0.9204 was briefly breached again as the swissie rallied at the end of the week. Next, the line of 0.9156, which, after providing weak support last week, is now in a resistance role.

This is followed by the round figure of 0.91. This important line has been tested in both directions recently, and the pair broke through this level on its downward swing this week. This line is now providing weak resistance, and could be tested if the dollar rebounds.

Next, there is support at 0.9002. This is followed by the support level of 0.8924, which has not seen any activity since late February. Below, is the line of 0.8850, which has acted in a strong support role since last November. Next is the support level of 0.8768, which USD/CHF last tested in November 2011.

This is followed by 0.8710, which has served as a strong support level since October of last year. The final line for now is 0.8621, which has provided support dating back to September 2011.

I remain neutral on USD/CHF.

USD/CHF traded in a narrow range for most of the week, only to lose ground following disappointing US data at the end of the trading week. Although the markets are concerned about the US economy, the financial crisis in the Euro-zone is no less worrying, particularly the fiscal situation in Spain. As a result, we could see the pair exhibit further choppiness.

Further reading:

Get the 5 most predictable currency pairs

About Author

Kenny Fisher - Senior Writer A native of Toronto, Canada, Kenneth worked for seven years in the marketing and trading departments at Bendix, a foreign exchange company in Toronto. Kenneth is also a lawyer, and has extensive experience as an editor and writer.

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