USD/CHF Outlook – July 25-29

The Swiss franc finally retreated across the board, as the European leaders finally provided some relief for the debt struck continent. The upcoming week consists of two key Swiss surveys. Here is an outlook for the events, and an updated technical analysis for USD/CHF.

The Swiss franc rode on global fear in the past months. The US debt ceiling still needs to be addressed, and the European debt crisis isn’t fully resolved, but the EU summit made positive progress. The overvalued Swiss franc retreated.

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

1. UBS Consumption Indicator: Tuesday, 6:00. This combination of 5 economic indicators was swinging in a limited range for a few months. Last month, it managed to jump higher, reaching 1.91. A similar number is likely now, expressing the strength of the Swiss economy.
2. KOF Economic Barometer: Wednesday, 9:30. This compound indicator is even more important. It is based on more indicators, 12, and has a stronger market impact. It slid to 2.23 last month, and is now expected to edge up to 2.30 points.

* All times are GMT.

USD/CHF Technical Analysis

Dollar/Swiss began the week with a Sunday gap that sent it to tick even lower than the 0.8080 line (discussed last week), at 0.8075. But from there, it climbed higher, settling in a higher range.

Technical lines, from top to bottom:

A major line on the upside is 0.89, although even after the rises, it is still far in the distance. 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 around one month 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 was more of a pivotal line, where the pair struggled, and is now a serious resistance line if the pair marches higher. Yet another all-time low of around 0.8330 is stronger now, after providing a cushion for yet another week.

The already previous all time low  0.8275 proved to be a strong line of resistance in the past week, after being a record low. It is followed by 0.82, which managed to cap a recovery attempt two weeks ago, and worked as a pivotal line now. This round number is minor now.

0.8130 is a minor line below. We’ve seen it work perfectly well as support, serving as the bottom border of the range. The fresh record low of 0.8075 is the final line in charted territory, before the round number of 0.80.

I am bullish on USD/CHF.

At least for now, the hopes in Europe are enough to push the Swiss franc lower. An announcement of a deal in the US (or a creative solution) will also help the pair. Also at the current levels, the strength of the Swiss franc weighs on the Swiss economy.

Gregor Horvat uses Elliott Wave technical analysis to mark the levels of USD/CHF.

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 Zealanddollar (kiwi), read the  NZD forecast.
• USD/CAD  (loonie), check out the  Canadian dollar.