USD/CHF Outlook - June 27

Ben Bernanke played down the chances of QE3 in the US. This helped the dollar against many currencies, but not against the ultimate safe haven currency – the Swissy.

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

UBS Consumption Indicator: Tuesday, 6:00. This large Swiss bank builds its composite index from 5 indicators. In recent months, the figure has stabilized at around 1.60. A small drop is likely now.
KOF Economic Barometer: Wednesday, 9:30. This index is wider and has a stronger impact. In the past few months, it has been on the rise, surprising each time. It reached 2.30 last month, and is expected to stay at this level.
SVME PMI: Friday, 7:30. Purchasing managers in Switzerland have been pointing to more growth in recent months. The indicator surprised last month and reached 59.2 points – this is very strong growth. The survey of 200 PMs is expected to tick down now.

* All times are GMT.

USD/CHF Technical Analysis

After falling below the 0.8463 line (discussed last week), dollar/Swiss continued lower, with an exceptionally strong move in the last hours of trade, ending around the all-time low.

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 worked as an excellent line of resistance just now. The new all time area of 0.8330 was breached now, but very marginally: the new record is 0.8326.

In uncharted territory down below, we have 0.8250, followed by the very round number of 0.80.

I am bullish on USD/CHF.

The strength of the franc against the dollar and especially against the euro, is weighing on the Swiss economy. The possibility of an intervention, and more importantly the end of QE2, can make way for reversal.

Yohay Elam

Yohay Elam: Founder, Writer and Editor I have been into forex trading for over 5 years, and I share the experience that I have and the knowledge that I've accumulated. After taking a short course about forex. Like many forex traders, I've earned a significant share of my knowledge the hard way. Macroeconomics, the impact of news on the ever-moving currency markets and trading psychology have always fascinated me. Before founding Forex Crunch, I've worked as a programmer in various hi-tech companies. I have a B. Sc. in Computer Science from Ben Gurion University. Given this background, forex software has a relatively bigger share in the posts. Yohay's Google Profile

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