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The  US dollar  continued to improve  against the Swiss franc  last week, as USD/CHF  closed the week 120 points higher than the previous week’s close. The upcoming week is a busy one, with  the release of five  important indicators, as the Euro Zone debt crisis  continues to worry the markets. Here is an outlook for the Swiss events, and an updated technical analysis for USD/CHF

Financial analysts are predicting  that the Swiss economy will dip into recession in 2012.  In addition, the Swiss franc  is  viewed as  overvalued, hurting Swiss producers and adding to the gloomy economic outlook.

Updates: The dollar retreated across the board on hopes for an IMF plan for Italy and other suggestions, that don’t seem realistic. USD/CHF dropped and is stabilizing above 0.92. USD/CHF dipped to around 0.9140 before rebounding back. Is the SNB intervening again? The Swiss franc also enjoyed the coordinated central bank action to help banks. While this may avert a credit crunch, it doesn’t solve the problem. In Switzerland, the disappointing KOF figure limits any possible drop of USD/CHF under 0.90. The pair is sliding lower towards the Non-Farm Payrolls. The Swissie is now behaving like a risk currency.

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

  1. UBS Consumption Indicator:  Tuesday, 7:00. This indicator measures consumer spending and confidence.  The previous reading was up slightly from 0.79 to 0.84.
  2. KOF Economic Barometer: Wednesday, 10:30. This important index is a composite of 12 economic indicators. The index has been in freefall since May, and dropped to a dismal 0.80 in October. A further drop is expected for this month’s reading.
  3.  Swiss GDP: Thursday, 6:45. The last release for Swiss GDP came in at 0.4%, up slightly from May’s release of 0.3%.
  4. SVME PMI: Thursday, 8:30. The Purchasing Managers Index  has been  below 50 for two consecutive months, indicating enconomic contraction.
  5.  Retail Sales: Friday, 8:15. The last three readings of the indicator, have been well below the market forecasts, and the Oct. 31 reading was a weak -0.9%.

*All times are GMT.

USD/CHF Technical Analysis

Dollar/Swiss  opened the week at .9162. It  climbed as high as .9330, before  closing the week  at .9182,  breaking the resistance line of 0.9262 (discussed last week).

Technical lines from top to bottom:

0.9370 was a tough line of resistance back in February and was also approached in April. It is strong resistance. The round number of 0.93  which  had served as a strong resistance line for USD/CHF, is under attack and was breached this week.    Below this, 0.9262 is a major line of resistance. 0.9224, which  was a support level in October, is now  a  resistance line. Next, 0.9206 is a resistance level which was tested this week.

The peak of 0.9182 reached in September is the next line. It also worked as support in February and March and is strong.

0.9089, which was a strong support level in mid-October, is again acting as support  for the pair.  Below, is  a minor support line at  0.9041. The round number of 0.90 is an important line. It capped the pair on a recovery attempt in April and was an important separator in September. It will be tested on any  downwards move.

0.8950  is a strong support line, and the next support level is at the round number of .8900.  The  final support line for now is 0.8781, which served as strong support in early November.

I am neutral on USD/CHF.

On one hand, the Swiss franc has suffered from the dollar’s strength due the deterioration in the debt crisis. But the franc still has somewhat of a safe haven status.

Further reading:

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