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:
- 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.
- 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.
- For a broad view of all the week’s major events worldwide, read the USD outlook.
- For EUR/USD, check out the Euro to 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.