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USD/CHF  traded in a narrow range last week. closing just above the 0.95 level. The upcoming week is a quiet  one, with  only two releases. Here is an outlook for the Swiss events, and an updated technical analysis for USD/CHF.

With the S&P cutting the credit rating for France and other European countries, the news in Europe continues to be grim, and the franc will likely be affected as well.

Updates: After a big decline last month, Swiss producer prices surprised with a rise of 0.3%. Is deflation leaving Switzerland? USD/CHF is stable around 0.9540. The franc enjoyed the hope from good European auctions and positive Chinese GDP to strengthen against the greenback, but the pair retraced some of the gains, moving to around 0.95. Swiss  ZEW Economic Expectations rose from -72 to -50.1 This means that investors are less pessimistic and helped the Swiss gain ground. USD/CHF is moving lower towards 0.9420. The US dollar fell across the board on  European optimism, and the Swiss franc enjoyed this. The 0.9350 area is tested.

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

  1. PPI:  Monday, 8:15. This important indicator measures inflation in the raw materials purchased by Swiss manufacturers. The indicator has dropped for three consecutive readings, and has been in negative territory since June. This is a clear indication of  continued weakness in the manufacturing sector. The December reading, which fell down to -0.8%,  was well below the market forecast. The market  prediction  for this month  is calling for a rise, up to -0.4%.
  2. ZEW Economic Expectations:  Wednesday, 10:00. This important leading economic indicator surveys    important institutional analysts and investors as to their views on Swiss economic conditions. The reading has dropped  to levels not seen since 2008,  adding to the very real concern  a recession later this year.

USD/CHF Technical Analysis

Dollar/Swiss  had a  quiet week.  The pair opened at 0.9584, which was the high of the week.    It quickly fell to  just above the 0.94 level, at 0.9406.    The  dollar then retracted, and the  pair closed the week  at .9510.

Technical lines from top to bottom:

We begin with the lines of parity and 0.9915, both of which are strong resistance levels which have not been tested since the end of 2010. These are followed by the resistance level of 0.9780, which was last tested by the pair in February. Next is a resistance line at 0.9636, followed by 0.9575, which was  touched by the pair this week.  Next, 0.9423 is providing  weak support, and was under attack this week.  This is followed by a strong support at 0.9315. Below, 0.9256 is  also providing major support for the pair.

The line of 0.9205 is an important support level, followed by 0.9165, which was severely tested in December 2011. Below, 0.9085, which was a strong support level in mid-October, is  once again  providing support  for the pair.  The  psychologically important  figure  of 0.90 is  the  final  support level  for now.  

I am  bullish on USD/CHF.

The  ongoing debt crisis reached new heights with credit ratings cuts to a host of European countries, including France and Italy. The dollar is poised to take full advantage of this situation, and the franc will likely lose some ground against the greenback.

Further reading: