Technical Bias: Neutral
Key Takeaways
• Euro continues to struggle against the Swiss franc.
• A break above the critical 1.2155 resistance area likely to open the doors for more gains in the EURCHF pair.
• EURCHF support seen at 1.2132 and resistance ahead at 1.2155.
The Euro has recently struggled against the Swiss franc, as the market sentiment favored more gains in the Swiss franc compared to the Euro.
Fundamentals
Yesterday, the Euro was a touch higher against the Swiss franc, with investors sitting on the sidelines ahead of key events such as the German ZEW economic sentiment, which is likely to cause a lot of moves in the Euro. Traders are also awaiting Swiss Producer Price Index (PPI), which will be released by the Federal Statistical Office later during London’s session. The forecast is slated for a 0.1% rise in the PPI, and if outcome comes better than expected reading might take the Swiss franc higher, else can take it lower.
Technical Analysis
There is an important descending channel forming on the 4 hour timeframe for the EURCHF pair. The channel resistance trend line has acted as a barrier for the Euro buyers’ many a times. The most interesting part is that the 100 simple moving average (SMA) is moving along the mentioned trend line, which is one of the main reasons why the Euro buyers are struggling to take the EURCHF higher. However, there is one more hurdle just above the channel trend line i.e. the 23.6% Fibonacci retracement level of the last drop from the 1.2237 high to 1.2132 low.
A break and close above the mentioned fib level might open the doors for a larger correction towards the 200 SMA (4H), which also coincides with the 50% fib level.
Overall, as long as the pair is trading above the 1.2130 support level the chance of a break above the channel resistance area is more compared to a break lower.
