EURCHF recently made a strong technical break past the previous year highs around 1.1000, signaling that further upside is likely. However, price found resistance at the 1.1200 major psychological mark and is pulling back to the broken area of interest.
Using the Fib tool on the latest swing high and low shows that this area is in between the 61.8% to 50% levels, which might hold as support. Price is now drawing support at the 38.2% Fib and 1.1000 mark but a larger correction could last until the 1.0800 area.
Stochastic and RSI are both on the move down, indicating that sellers are taking control of price action. Data from Switzerland has shown no evidence of central bank intervention in the forex market just yet, causing traders to ease up on their short franc positions.
The 100 SMA is still above the longer-term 200 SMA so the path of least resistance is still to the upside, which suggests that a bounce is in order soon. However, both oscillators still have a long way to go before indicating oversold conditions so a larger correction is indeed possible.
Data from the euro zone has been below expectations and upcoming data from its top economies might also turn out to be disappointments. German industrial production and trade balance are on today’s docket, along with Switzerland’s unemployment rate.
Later on in the week, German preliminary GDP and CPI figures are due and further weakness could reinforce expectations of additional ECB easing in March, which usually weighs on the shared currency. However, this also increases the odds of SNB intervention especially since central bank officials have continued to jawbone the currency.
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