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The  Swiss franc  rose  against  the dollar, but gave back most of these gains by week’s end. The upcoming week has three important indicators, and the hope of positive news from  the European Summit dealing with the crippling debt crisis. Here is an outlook for the Swiss events, and an updated technical analysis for USD/CHF.

Switzerland’s economy grew at the slowest pace in more than two years in the third quarter, largely due to corporate cutbacks and lower exports The franc is up by 7 percent against the euro over the past year, putting a further damper on the  export sector.

Updates: USD/CHF fell as low as 0.9164 after the Merkozy announcement, but it moved back up afterwards. Prices in Switzerland fell once again, according to the latest CPI report. This raises the chances of another intervention by the SNB. USD/CHF jumped higher and touched 0.93. The dollar also enjoyed the stark warning by S&P regarding all euro-zone nations, as risk intensified. EUR/CHF is indeed moving up, despite the euro’s weakness. There is talk that the Swiss National Bank is operating through the BIS. USD/CHF is getting closer to 0.93. The Swiss franc is a risk currency once again. After the ECB offered no big help to indebted European countries, USD/CHF is moving up, to 0.9280. Hope for Chinese help to the euro-zone weakened the US dollar and allowed the pair to fall to 0.92. Earlier, the pair moved up on the disappointment from the EU summit.

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

  1. Foreign Currency Reserves:  Tuesday, 8:00. October’s figures were disappointing, down to 242.7B from 282.4B in September.
  2. CPI: Tuesday, 8:15. The inflation index was down in October, dipping to -0.1% after  September’s figure of 0.3%. The forecast for this month is higher, at 0.1%.
  3.  Unemployment Rate: Wednesday, 6:45. Unemployment has stayed at exactly 3% since June. The forecast for November’s figure is practically unchanged at 3.1%.

*All times are GMT.

USD/CHF Technical Analysis

Dollar/Swiss  opened the week at 0.9277. It  dropped as low as 0.9069, which  had acted as a line of major resistance for the pair (discussed last week)  before  closing the week  at 0.9205.

Technical lines from top to bottom:

We start with the resistance line at 0.9636. Next, 0.9479 is a strong resistance level. It is followed by 0.9370, which served as a tough line of resistance back in February and was also approached in April. It is strong resistance.  0.9310,  which  had served as a strong resistance line, is under attack and was  the pair’s high of the week.

For support, 0.9139 has provided a major support level for the past few weeks. 0.9081, which was a strong support level in mid-October, is again acting as support  for the pair.  Below, is  a minor support line at  0.9041. The round number of 0.90 is an important line. It capped the pair on a recovery attempt in April and was an important separator in September. It will be tested on any  downwards move.

0.8950  is a strong support line, and the next support level is at the round number of .8900.  The  final support line for now is 0.8781, which served as strong support in early November.

 I am bullish on USD/CHF.

The Swiss economy is expected to head into a recession sometime next year, and most analysts consider the franc overvalued against the Euro and other major currencies.

Further reading: