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After diving to fresh all time lows, USD/CHF made a significant bounce back up. The upcoming week consists of important inflation figures. Here’s an outlook for the Swiss events, and an updated technical analysis for USD/CHF.

USD/CHF chart with support and resistance lines on it. Click to enlarge:USD CHF Chart May 9-13

The dovish stance by Jean-Claude Trichet, that also resulted with a drop in commodity prices, took some of the hot air out of the Swissy. Will this continue? Let’s start:

  1. SECO Consumer Climate: Tuesday, 5:45. Consumer confidence has recovered last month according to this official survey from SECO. The score, the rose from 7 to 10 points in this 1000 household strong survey, is likely to remain at similar levels.
  2. CPI: Tuesday, 7:15. The rising commodity prices reached Switzerland in the past two months, with the consumer price index rising above expectations. Last month’s 0.6% rise will likely be followed by a rise of 0.5% now, but it may be higher. The recent fall in commodity prices will only be seen next time.
  3. PPI: Friday, 7:15. Rises in prices have been more moderate for producers, with a rise of  0.4% last month, within expectations. A similar figure is expected now. A number above 0.5% will be worrying.

* All times are GMT.

USD/CHF Technical Analysis

After a struggle with the previous low of 0.8626, the pair fell to a new historic low of 0.8553. But from there, the Swiss franc weakened and shot up, closing at 0.8787, just above the 0.8780 level (mentioned last week).

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 had the opposite role as resistance, when the pair began rising.

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 turn bullish on USD/CHF.

After a long time, the hot air might begin its way out of the Swissy. Switzerland’s economy is doing great, but the falling commodity prices and the European weakness might be marking a long awaited turnaround.

Further reading: