EURCHF up to January’s 2015 high
|EURUSD & EURCHF, H1
German ZEW investor confidence fell back to -8.2 from 5.1% in the previous month. This is a more pronounced correction than anticipated and the first time sine July 2016 that pessimists outnumbered optimists. Back then it was the unexpected outcome of the Brexit vote that knocked confidence back and the index recovered in the following month. Apart from that one off negative number we have to go back to November 2012 to find negative readings. A clear warnings sign, even if the ZEW is surveying investors rather than the real economy and will thus be more impacted by market volatility and global uncertainties, which may or may not materialise. So far the view is that a slow down in growth momentum is quite welcome in the German economy, which is already running above capacity, but the clouds clearly are gathering on the horizon.
The slow down in growth momentum, weighed on Euro. The EURUSD has been seen reverting lower, down to 1.2378 after the data. The next immidate support levels, come to the recent hourly fractal low at 1.2371, and atteh Pivot Point at 1.2365. Hence is likely to see a rebound on that levels, and a continuation back high. However if pair does not manage to be held above these levels, then 30 minutes chart will be in our watch list, for a possible swing lower to the next support level at 1.2395.
Another interesting Euro cross is EURCHF, which has soared to a new 39-month highs above 1.1900, aided by concomitant gains in EURUSD and USDCHF. A background support for the cross is the widespread expectation for the SNB to remain strongly committed to negative interest rates until after the ECB starts tightening. The central bank’s chairman, Jordan, said in an interview over the weekend with La Liberte newspaper that “it is not yet time to change monetary policy,” adding that “we do not want to provoke an appreciation of the Swiss franc.” Jordan said that the economic situation has improved over the last year, but low inflation (at 0.8% y/y in March) remained, a problem.
EURCHF has rallied 11% from mid last year. A long standing target is held for the cross to return to the 1.2000 level, which was the SNB’s cap that was abandoned back in January 2015 in the face of euro depreciation caused by ECB monetary stimulus.
There's more! Access all our latest analyses and other great content by subscribing to the HotForex Youtube channel. You can also talk to our experts live by registering for one of our free webinars!
Information on these pages contains forward-looking statements that involve risks and uncertainties. Markets and instruments profiled on this page are for informational purposes only and should not in any way come across as a recommendation to buy or sell in these assets. You should do your own thorough research before making any investment decisions. FXStreet does not in any way guarantee that this information is free from mistakes, errors, or material misstatements. It also does not guarantee that this information is of a timely nature. Investing in Open Markets involves a great deal of risk, including the loss of all or a portion of your investment, as well as emotional distress. All risks, losses and costs associated with investing, including total loss of principal, are your responsibility. The views and opinions expressed in this article are those of the authors and do not necessarily reflect the official policy or position of FXStreet nor its advertisers.