USD/CHF Outlook – July 4-8

The Swiss franc made fresh records against the dollar, but couldn’t hold on to them. Will the optimistic atmosphere send the pair higher? Or is consolidating before the next crisis? The upcoming week’s highlight is the CPI figure as well as retail sales. Here’s an outlook for the Swiss events, and an updated technical analysis for USD/CHF.

The fear around Greece sent the franc to record levels against the dollar and the euro. But when the Greek parliament voted in favor of austerity, it marked a turning point for the safe haven currency as well.

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

1. Retail Sales: Monday, 7:15. This important consumer figure is measured on a year-over-year basis. After a rise of 7.5% last month, a result that was a very positive surprise, a rise of 4.6% is expected now. This is still very high.
   
2. Philipp Hildebrand talks: Monday. The head of the Swiss National Bank is likely to express concern over the high value of the franc, but will probably abstain from threatening an intervention, as these failed in the past.
3. CPI: Thursday, 7:15. After a few months of strong rises, the prices stalled in Switzerland. This is due to the strong value of the Swiss franc, and the drop in commodity prices. A drop is prices is likely now.
4. Unemployment Rate: Friday, 5:45. Many countries envy the Swiss unemployment rate. It has fallen to an amazing 3% last month, and is likely to remain at this level once again.

* All times are GMT.

USD/CHF Technical Analysis

Dollar/Swiss managed to hold on above the previous lows of 0.8330 at the beginning of the week. It then made a short lived break lower, reaching 0.8275, a new line that didn’t appear last week. From there it turned around and closed at higher ground.

Technical lines, from top to bottom:

We start from 0.9370, which 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. This line is further away now.

0.8625 was the previous trough and now works as minor resistance, switching positions from two weeks ago.  The older all-time low of 0.8553 is still of high importance.

The next line is previous all time low of 0.8463 which wasn’t as strong and definitive than in previous weeks. The previous all-time lows of around 0.8330 are weak support now, after being shattered.

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

I remain bullish on USD/CHF.

The end of QE2 in the US, as well as some encouraging figures for the month of June, provide hope for the US economy. The franc is still at an extreme strength that hurts the Swiss economy. A downwards risk comes from Greece, that passed the biggest hurdles, but still has a long road to go.

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.
• For USD/CAD (loonie), check out the  Canadian dollar
• For the Swiss Franc, see the  USD/CHF forecast.
• USD/CAD  (loonie), check out the  Canadian dollar.