USD/CHF Outlook April 4-8

The Swiss franc continues its retreat from record highs against the dollar. Will this continue? Here’s an outlook for the Swiss events and an updated technical analysis for USD/CHF, now in higher ground.

Even though the limelight isn’t currently on Libya, the fighting continues and oil production from this North African country is still limited. The Swissy is very sensitive to global fears, which have waned for now, pushing USD/CHF higher.

USD/CHF  daily chart with support and resistance lines marked. Click to enlarge:

1. CPI: Wednesday, 7:15. Prices in Switzerland aren’t at inflationary levels, but last month’s stronger than expected rise of 0.4% hints that the rise in commodity prices might be creeping here as well. A more modest rise of 0.2% is expected now.
2. Unemployment Rate: Friday, 5:45. The Swiss unemployment rate is envied by everybody. From the current level of 3.4%, it’s expected to drop even further to 3.3%. A drop to 3% or a rise to 3.7% will rock the Swissy.

USD/CHF Technical Analysis

Dollar/Swiss traded within a range throughout most of the week, capped under 0.92. It did managed to break above the this line, but a further attempt to conquer 0.9330 triggered a big retreat, and the pair closed at 0.9237.

Looking down, immediate support is found at 0.92. This line held the pair at the end of February / beginning of March and now works again as strong support.

It’s followed by a big wild range, with the next support line being at the round number of 0.90.  The last line of support is the all-time low of 0.89.

Looking up, the initial line of resistance is 0.9330, which was a bottom in January. This line is very closely followed by 0.9370, which was a peak a few weeks ago.

Moving higher, 0.95 was a good cushion in October and December and now works as minor resistance. It’s followed by 0.96, which provided support at the beginning of the year.

Further above, 0.9790 is already a very strong line – the highest level in 2011, challenged twice without success. There are more lines above, but they’re quite far.

I’m bullish on USD/CHF

The Swiss franc gained a lot, especially after the Japanese earthquake, but these gains are becoming a burden on the economy. On the other side of the pair, the US economy is improving, as seen in the Non-Farm Payrolls.

Further reading:

• For a broad view of all the week’s major events worldwide, read the  USD outlook.
• For the Japanese yen, read the  USD/JPY forecast.
• For GBP/USD  (cable), look into the  British Pound forecast.
• For the Australian dollar (Aussie), check out the  AUD to USD forecast.
• For the New Zealand dollar (kiwi), read the  NZD forecast.
• For USD/CAD (loonie), check out the  Canadian dollar.