CHF looking under fire & WTI losing steam

While the CHF benefitted as a safehaven during the financial market turmoil on Monday, the currency has since been offloaded across the board. The Swiss economy is still facing pressures with the stronger CHF following the events in January, and most participants remain bearish on the currency. The stronger CHF is weighing on the economy and the GDP data out of Switzerland today showed that the economy only narrowly avoided another economic contraction.

There is also a possibility that the recent events in China will add further pressure to the Swiss economy. Swiss exports to Asia have already dropped by approximately 2.6% but the recent currency weakness in Asia means that this could increase further, while exports to Europe have dropped by close to 10% following the abrupt removal of the EURCHF minimum exchange rate in January.

After rallying to over $4 yesterday, WTI has suffered during trading today. Prices peaked at $43.40, but the drop back below $42 suggests the gains might be shortlived. From a technical perspective, this is still a bearish market and this could be a situation where sellers took profit at the milestone lows around $37.70 before potentially reloading positions below the previous lower high of $45. The fundamental outlook for the oil markets remain bleak as there is still an aggressive oversupply combined with concerns about less demand for the commodity. The previous lows of 2009 at $33 therefore remain a possibility.

EURCHF

The EURCHF is fundamentally bullish. This is a situation where roles have been reversed with the EUR having gained some unexpected safehaven attributes, and the CHF looking vulnerable to further declines. With this in mind, the EURCHF can continue to trade higher. Looking at the technical perspective, the attributes of an uptrend hold firmly on the EURCHF. There are higher highs and higher lows, prices have not traded above the prior lows of 1.0700. With resistance based at 1.090, the best strategy may be to take advantage of a breakout.

Leading and lagging indicators point to the upside, prices are above the 20 daily SMA and the MACD is trading to the upside. As long as prices can keep above the 1.070 level, the bullish daily outlook remains valid.

USDCHF

The events after Monday have accelerated the USD bulls. The bullish sentiment on the USD has been reimbursed following upbeat comments from the FOMC’s William Dudley and impressive GDP figures from the United States. This has encouraged the USDCHF to trade back to the 0.9660 level, but the technical outlook on the pair is still bearish because prices not only remain below the 20 SMS but the MACD is also trading on the downside. Saying that, the prices have found some support above the monthly pivot and if a break above the 0.9715 resistance does occur, this will verify the start of an uptrend.

GBPCHF

GBPCHF was in a healthy uptrend up until resistance was found at 1.5400. Prices experienced a breakdown below the 1.5150 support which caused a further decline to 1.4600. The GBP is fundamentally bullish whilst the CHF is bearish, but this does not really reflect that well on the charts. GDP figures for the GBP were released today at 0.7% matching expectations, but prices have declined on the GBPCHF. Technically this pair is bearish and the lagging indicators suggest so. The MACD trades to the downside and prices are below the daily 20 SMA. There seems to be a potential lower high in the making at the 1.4900. If this level does hold then a move back to 1.460 may be a possibility. If bulls do emerge and rally back above 1.4900, eyes will be on the 1.5150 once more.

CHFJPY

The CHFJPY is both fundamentally and technically bearish. Global events have caused the JPY to appreciate and showcase its safe haven characteristics, whilst sentiment for the CHF remains bearish due to its hefty appreciation which is slowing down the domestic growth in the Swiss economy. Technically the attributes of a downtrend are visible, for example prices have created lower lows and lower highs. The breakdown below the previous lower low of 126.00 may suggest a further decline to the next relevant support of 124.00. A correction below 127.70 might offer investors a sellon rally opportunity, while a move above 127.70 would invalidate the bearish outlook on the CHFJPY.