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The Swiss franc  had another quiet week,  and showed little change against the dollar this week.  The upcoming week is very quiet, with only two releases.  Here is an outlook for the Swiss events, and an updated technical analysis for USD/CHF.

All eyes are on the Greek bailout deal, as the troika and the Greek government try to hammer out a deal. The Greek parliament must  approve a deeply unpopular austerity package, which promises to be a tough battle. With so much at stake for the eurozone on this vote, the news out of  Athens this week  promises be anything but dull.

Updates: Swiss PPI disappoints by remaining unchanged. With deflation, another intervention could occur. USD/CHF is lower, partially enjoying the Greek austerity approval. The doubts about the deal for Greece helped the US dollar and sent USD/CHF a bit higher.  ZEW Economic Expectations improved in Switzerland and rose to -21.2 points. The worries about Greece keep the pair from falling, and it remains around 0.9180. USD/CHF is on the rise after the situation in Greece deteriorated  and the FOMC minutes showed low chances of QE3 in March. The pair is close to 0.93. The upcoming deal for Greece weakened the dollar. USD/CHF is under 0.92 once again.

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

  1. PPI:  Monday, 8:15.  The Producer Price Index is an important indicator of consumer inflation. The index  rose by 0.3% in January, surprising the markets, which had predicted a decrease. If the index can again beat the market forecast, this would be bullish for the pound.
  2. ZEW Economic Expectations:  Wednesday, 10:00. This  index is based on a survey of institutional investors and analysts,  who  have extensive experience with  market and economic  conditions.  The index is well below the 50 level, indicating a pessimistic outlook. On the bright side, the January reading of -50.1 was the index’s best performance since June 2011. An improved  figure this month could bolster confidence in the Swiss economy.

USD/CHF Technical Analysis

USD/CHF continued to trade in a narrow range this week. The pair opened at 0.9193, and reached a high early in the week  of 0.9263.  The low for the week was 0.9089, as the support level of 0.9085 (discussed last week)  is holding for the time being. The pair closed the week  at  0.9147.

Technical lines from top to bottom:

We begin with 0.9780, a strong resistance line, last tested by the pair in February 2011.  Below, is a resistance line at 0.9636. This is followed by 0.9510, which was tested earlier this month, and is providing strong resistance. Below, is the line of 0.9412, which earlier in the month was acting as support, and is now in a resistance role. Next is the weak resistance line of 0.9306, which was breached in January.  This is followed by a weak resistance level at 0.9250, which the pair broke through this week. It could be tested on any recovery by the dollar. Below, 0.9204 has been an important line since November 2011, providing support until very recently.

The line of 0.9120 has been repeatedly tested in February, as the  dollar has weakened and the pair has moved downwards. Next, 0.9085 is providing weak support and could be tested on  a further downswing by the pair.  The  psychologically important  round figure of 0.90 is providing strong support for now.  The support level of 0.8950 has provided firm support since November 2011. This is followed by 0.8850, which is providing the pair with major  support. The final support line for now is 0.8768, which has not been tested since last November.

I am  neutral on USD/CHF.

After an outstanding January, the pair  continues to trade in range.  Much depends on the outcome of the Greek bailout agreement, as further financial uncertainty in the  eurozone  will likely bring volatility to the currency markets.

Further reading: