Mounting concerns for the U.S. automotive and banking sector sparked a rise in risk aversion across the financial markets, and as the European Central Bank is widely anticipated to lower the benchmark interest rate by 50bp on Thursday, expectations for further easing by the central bank is likely to weigh on the exchange rate as the euro-region faces its worst economic downturn in over half a century.
Currency Pair: EUR/CHF
Chart: 60 Min Charts
Short-Term Bias: Flat
Analysis
Mounting concerns for the U.S. automotive and banking sector sparked a rise in risk aversion across the financial markets, and as the European Central Bank is widely anticipated to lower the benchmark interest rate by 50bp on Thursday, expectations for further easing by the central bank is likely to weigh on the exchange rate as the euro-region faces its worst economic downturn in over half a century. After slipping to a low of 1.4299 in October, the EUR/CHF snapped back to reach a high of 1.5885 on 12/15, but the lack of momentum to push back above 1.5540-50 (21.4% Fib) paired with the shift is market sentiment is likely to hold the pair within a broad range over the near-term as the economic slump in the global economy intensifies. Over the next few hours of trading, we may see the euro-franc attempt to push above the 120 SMA to retrace the sell-off from the previous week however, as the RSI approaches overbought territory, gains to the upside are likely to be capped. Meanwhile, as the Swiss National Bank intervenes in the currency markets to stem the appreciation in the franc, we could see the EUR/CHF build short-term support around 1.5090-1.5100 (50.0%), and may push back to make a run for 1.5540-50 (21.4% Fib). Be sure to check out other Technical Reports from DailyFX for additional information on the major currency pairs.
To contact the author of this article, please email: dsong@fxcm.com
Related Articles:
Forex Trading Weekly Forecast - 03.30.09
Euro Decline Accelerates Back to 100-Day SMA; Stops Trailed on Usd/Cad Long (Daily Classical)
