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The  US dollar rallied against the Swiss franc  last week, as USD/CHF climbed  over 170 points  at week’s close.  The upcoming week has  only one  important indicator, and the  turmoil in the  markets  will likely  continue,  as the Euro Zone debt crisis  has now spread to  France and Spain. Here is an outlook for the Swiss events, and an updated technical analysis for USD/CHF.

The Swiss economy is in trouble, with recent  job cuts over the past few weeks at export-based companies and in the banking  industry, and forecasts of lower growth.   There are increasing calls for the Swiss central bank  to raise the floor of the EUR/CHF from 1.20 to a more realistic  1.30.

Updates: Dollar/Swiss remains range bound, but the disappointment that came from the US GDP is certainly a problem. Weak Chinese PMI adds to global worries, in what seems like a synchronized slowdown, yet the Swissie still has some kind of safe haven status and remains stable. Swiss notes compete with German bonds on the benchmark and safe haven status. The horrible German bond auction has shown that nothing in the euro-zone is safe. This adds weight on EUR/CHF, and the SNB could intervene in this cross if it falls too low. The implications will be felt in USD/CHF. The euro continues lower, and this supports the Swiss franc. Currently, USD/CHF remains balanced, but the downgrades of Portugal and Hungary (where Swiss franc mortgages are common) might trigger the SNB to intervene and push USD/CHF higher.

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

Trade Balance:  Tuesday, 7:00. This is the  only Swiss  indicator  being released this week. September’s figures  were well above the market forecast, coming in at 1.85B. October is expected to be even rosier,  with  a prediction of a further improvement in the trade balance to 2.06B.

*All times are GMT.

USD/CHF Technical Analysis

Dollar/Swiss began the week at .8990. It  climbed as high as .9220, before  closing the week  at .9164, slightly above  last week’s high of .9152 (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. Next, the round number of 0.93 remains a strong resistance line for USD/CHF.  This level has  not been broken since  March, save for one  day in October.  Below this, 0.9262 is a major line of resistance. 0.9224, which  was a support level in October, is now  a  resistance line.

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,  with the  final support line for now at the round number of 0.88.

I am bullish on USD/CHF

There was some good  news about the US  economy last week,  as US jobless claims fell for the  third straight week. Meanwhile, the Euro Zone debt crisis  continues to  spread,  which could take a toll on the  Euro.  As the euro is vulnerable,  this could result in upwards pressure on USD/CHF.

Further reading:

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