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The  Swiss franc  rose sharply against  the dollar  at the start of last week, but the dollar rebounded nicely,  gaining almost 100 points during the week.  The upcoming week has two important indicators, and the likelihood of  jittery markets continues as nervous investors anxiously follow the debt crises in Italy and Greece. Here is an outlook for the Swiss events, and an updated technical analysis for USD/CHF.

In October, the KOF economic  index  dropped to  its  lowest level in two years.  Economic growth is expected  to weaken, due to the strong Swiss franc, the debt crisis in Europe, and  a weak  U.S. economy.

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

  1. PPI: Monday, 8:15.  For the past  five months, producer prices have fallen in Switzerland. This was in large part due to the strength of the Swiss franc. We will probably see another slight drop in this fugure for November.
  2. ZEW Economic Expectations: Thursday, 10:00. This indicator  surveys analysts and institutional investors regarding their future expectations about where the economy is headed.  Recent readings have been deep in negative territory, signalling strong pessimism about the economy. October’s reading  did show some improvement at -54.4.  Given the economic turmoil gripping Europe, we can expect another sharply negative reading in November.

*All times are GMT.

USD/CHF Technical Analysis

Dollar/Swiss began the week by dropping to a low  of .8892,  but then made impressive gains,  reaching a high of .9152. The pair  ended the week  just above the important line of .9000 (discussed last week) to close at .9015.

Technical lines from top to bottom:

0.9286 remains   a major  resistance line for USD/CHF.  The peak of 0.9183 reached in September is the next line. It also worked as support in February and March and is strong.

Last week, USD/CHF briefly broke above 0.9145, which  provided support at the beginning of October.  The more recent cap of 0.9082 is another minor line of resistance.  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 upwards move.

Below, 0.8920 is a support level for the pair.    The next support line at the round number of 0.88.

Below, 0.8760  has provided support in early November. 0.8680 is another minor line that provided support for the pair in September.

I am bullish on USD/CHF

There is room for more intervention by the SNB on EUR/CHF. And as the euro is vulnerable, it could result in upwards pressure on USD/CHF.

 

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