USD/CHF Outlook – May 23-27

Dollar/Swiss lost some of its recent gains in the past week. Will it approach all time lows? The upcoming week consists of three key events that will rock the pair. Here’s an outlook for these events and an updated technical analysis for USD/CHF.

The dollar stabilized against other currencies in the past week, allowing the Swissy to ride once again. The debt crisis in the Euro-zone also support the franc.

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

1. Trade Balance: Thursday, 6:15. Switzerland traditionally enjoys a surplus. Last month, the surplus significantly squeezed to 1.09 billion francs, half of early expectations. A correction is likely now.
2. Employment Level: Thursday. With an extremely low unemployment rate, it’s no wonder that the number of people employed in Switzerland is only the rise. It’s expected to tick up once again from the current level of 4.09 million.
3. KOF Economic Barometer: Friday, 9:30. This highly regarded compound index has risen in the past four months, beating expectations time after time. It’s now predicted to slide from the score of 2.29 recorded last time.

USD/CHF Technical Analysis

After piercing through the 0.89 level (discussed last week), the pair continued lower and ended just under the 0.8780 line.

Technical lines, from top to bottom:

0.96 provided support at the beginning of the year and this is top frontier at the moment. Another round number will be another line of struggle – 0.95 – it worked in October and in December as support.

0.9370 is the next important line – it was a stubborn peak at the end of February and at the beginning of March, making it a strong line of resistance also now.  It’s followed by 0.92, which was an excellent cushion at the same period of time.

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 now worked as support as well. This will be a pivotal line at the beginning of the week.

0.8625 was the previous trough and now works as minor support. The final frontier on the downside is at the round number of 0.85, below the fresh all-time low of 0.8553.

I remain bullish on USD/CHF.

There’s too much hot air in the Swiss franc. When oil starts falling lower, the pair is likely to resume its rises.

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/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