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The Swiss franc  had a quiet week against  the dollar, closing  just below the 0.94 level, which was very close to where it started the week.  There are three releases  in the  upcoming week. Here is an outlook for the Swiss events, and an updated technical analysis for USD/CHF.

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

 

 

  1. SVME PMI:  Tuesday, 8:30. This important leading indicator is  on a strong downward trend, slumping from a high of 63.5 in March, all the way down to 44.8 in December. The last three readings have all been below the market forecasts,  and the forecast  predicts little change.  Will the first release of the new year show some much-needed  improvement in the PMI?
  2. SNB Chairman Hildebrand Speaks:  Thursday, 15:00. Whenever the head of the central bank speaks, analysts listen carefully  for any hint of interest rate moves, which would likely have an effect on the currency markets.  Comments which are more hawkish than forecast is bullish for the franc.
  3. Foreign Currency Reserves: Friday, 8:10. The Swiss attach great importance to their foreign currency reserves. The indicator has pointed downwards since October, and a further drop could  point to a lack of confidence by international investors, and spell trouble for the franc.
  4. CPI:  Friday, 8:15.This important inflation index is usually released in the first week of each month. The index has been in negative territory for the past two readings, although the market is forecasting a  rise this  month  to the important 0% level.

USD/CHF Technical Analysis

Dollar/Swiss  showed little movement this week, with some slight pressure on the franc. The pair opened the week at 0.9360. It  dipped  slightly  to 0.9318, before climbing to 0.9470, very close to the  strong resistance line of 0.9479  (discussed last week).  The pair  closed just shy of the 0.94 level, at 0.9392.

Technical lines from top to bottom:

We start with 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 strong resistance  levels at  0.9540 and 0.9479. The round figure of 0.94 was touched this week, and will be  tested on any upwards move.  0.9340 is now in a role of weak support, followed by the line of 0.9210.

0.9085, which was a strong support level in mid-October, is  once again  providing support  for the pair.  The round number of 0.90 is  the next  important support level. Next is 0.89, which acted as strong resistance in mid- 2011 and is  now a major supprt line. The  final support lines for now  are 0.8640    and the round level of .8600.

 I am  bullish on USD/CHF.

Economic indicators, such as the  well-respected KOF Economic Barometer, paint a picture of an economy headed in the wrong direction, and analysts are predicting that the Swiss economy will dip into a recession sometime next year. The US economy appears to be improving, and the dollar has been  on  a recent  upswing  against most major currencies.

Further reading:

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