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The  Swiss franc  traded quite choppily but continued to fall against the greenback.The week is relatively light in events, but we will get a first evidence if the intervention by the SNB managed to stop deflation. In addition, here’s an updated technical analysis of USD/CHF.

One of the main drivers of franc weakness was the talk of a higher floor under EUR/CHF, or more SNB intervention if you wish. Data released in Switzerland has shown that the global slowdown leaves no one immune. Retail sales disappointed with a drop, and also manufacturing dropped into negative territory according to  SVME. Will the lower value of the franc help the economy improve?

USD/CHF daily graph with support and resistance lines on it. Click to enlarge:USD CHF Chart  October 10 14 2011

  1. PPI: Thursday, 7:15. In the past four months, producer prices have fallen in Switzerland. This was due to the strength of the Swiss franc – the justification for the intervention. After the big fall of 1.2% last month, we will probably see some of the impact of the intervention in this figure for September – a small rise.

* All times are GMT.

USD/CHF Technical Analysis

Dollar/Swiss started off the week with a jump above the 0.9085 (mentioned last week) and never looked back. It traded in a high range and eventually closed just under the 0.9295 line.

Technical lines from top to bottom:

We start from a very high line, but given the current volatility, anything is possible. 0.9783 was a very stubborn peak back in January and in February of 2010 (double top). The next distant line is the round number of 0.96, which provided support at the same period of time.

0.9505 is minor resistance after serving as such at the beginning of 2011.  0.9370 was a tough line of resistance back in February and was also approached in April. It is strong resistance. 0.9295 capped the pair in March and earlier worked as support. Although it was run through, the pair didn’t manage to conquer it, so it prevails.

The peak of 0.9182 reached in September is the next line. It also worked as support in February and March and is strong. It is closely followed by 0.9145, which provided support at the beginning of October.

The more recent cap of 0.9085 is another minor line of support.  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.

Below, 0.8930 served as support in April and also worked as resistance in September – more than once. It is strong support.  The round number of 0.88 is minor support beneath.

Uptrend support

Note the clear uptrend support seen on the chart. It began in mid September and continues to accompany the pair.

I am neutral on USD/CHF.

The current run, also fueled by the rumors of another SNB intervention might run into some consolidation for the time being, especially as the recent jobs report in the US provided some relief.

Further reading: