USD/CHF Outlook – July 11-15

This week, there is no new historic bottom for USD/CHF, which seems to have stabilized. The upcoming week is light in events, so the technical lines and the debt crisis news will continue rocking the currency. Here’s an outlook and an updated technical analysis for USD/CHF.

The aid presented by Trichet to Portugal certainly eased tensions after the big downgrade from Moody’s. With less fear in the markets, the Swiss franc weakened. Will this continue?

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

1. PPI: Wednesday, 7:15. Prices in Switzerland are slowing down. This is a result of the strong franc and the falling commodity prices. After a few months of steady rises in producer prices, a drop of 0.2% was reported last month. A similar drop is likely now.

* All times are GMT.

USD/CHF Technical Analysis

Dollar/Swiss fell at the beginning of the week, but didn’t challenge the 0.8330 line (discussed last week). It then recovered and also broke above the 0.8563 line.

Technical lines, from top to bottom:

While still far away, 0.9370 is of importance, This was a stubborn peak at the beginning of March. Below, 0.92, an excellent cushion at the same period of time is resistance.

Minor resistance is found at 0.9125 after working as minor support earlier this year.  The round number of 0.90 worked well in both directions, especially as resistance, capping recovery attempts by the pair.

Another major line is 0.89. This was a double bottom, and was an all time low for around one month, until lower levels were reached.  0.8780 was a swing low and capped the pair. It is minor resistance at the moment.

0.8625 was the previous trough and now works as minor resistance, switching positions from a few weeks ago.  The older all-time low of 0.8553 remains very important and can be challenged quite soon.

The next line is previous all time low of 0.8463 which is now more of a pivotal line, where the pair struggled. The previous all-time lows of around 0.8330 is stronger now, after providing a cushion now.

The new all-time low of 0.8275 is the final frontier in charted territory. It was set two weeks ago.  In  uncharted  territory down below, we have 0.8250, followed by the very round number of 0.80.

I am neutral on USD/CHF.

On one hand  end of QE2 in the US and the excessive strength of the franc point to a strong dollar/Swiss. On the other hand, the weak Non-Farm Payrolls in the US and the debt crisis in Europe fuel global fears, and this weighs heavily on the pair.

Further reading:

• For a broad view of all the week’s major events worldwide, read the  USD outlook.
• For EUR/USD, check out  the  Euro to Dollar forecast.
• 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.
• USD/CAD  (loonie), check out the  Canadian dollar.