EURCHF has been on a decline recently but is currently stalling at an area of interest visible on the 4-hour chart. Price is testing the 61.8% Fib of the latest swing high and low, which might be the line in the sand for this corrective wave.
This coincides with a former resistance level around 1.0900 to 1.1000, which might keep further losses in check. RSI and stochastic are already turning up from the oversold levels, indicating a pickup in buying pressure.
However, the moving averages appear to be on the verge of making a downward crossover, weighing on future gains. In that case, EURCHF might break below the 1.0900 mark and signal another round of declines.
The ECB is still widely expected to ease again in March in order to stabilize prices and shore up growth. While the SNB is typically expected to respond with a similar form of easing or currency intervention, Chairman Thomas Jordan’s speech yesterday suggested otherwise.
The SNB head said that they can’t be expected to implement unconventional monetary policies endlessly, possibly referring to their negative interest rates. Investors saw this as a sign that the Swiss central bank might be finding it too costly to keep the franc weak and might not be able to add further stimulus anytime soon.
In addition, the franc has drawn a bit of demand on its safe-haven appeal in the region, as the Brexit issue is making money flow out of the UK. While data from Switzerland has been weak, the economy appears to be in far more stable footing compared to its euro zone peers.
A strong downside break below the 1.0900 handle could be enough to confirm that a reversal or downtrend is taking place while reversal candlesticks and a move past the 1.1000 level could be a sign that the correction is over.
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