EURCHF is trending higher on its 1-hour time frame after making a successful break past a key resistance level. Price is moving inside an ascending channel and is currently testing the support.
A bounce might take place and bring EURCHF back to the channel resistance. Support at the 1.1130 area appears to be holding since this also lines up with the 100 SMA dynamic inflection point.
The 100 SMA is above the 200 SMA so the path of least resistance is to the upside. With that, EURCHF might climb to the top at 1.1220, as stochastic is indicating a pickup in buying pressure.
Both RSI and stochastic are pointing up, which means that euro bulls are taking control of price action. However, a return in selling pressure could still lead to a break of support and a move towards the 200 SMA at 1.1080.
Switzerland will print its foreign currency reserves data today and might show an increase in holdings, which might be interpreted as central bank intervention. Keep in mind that the SNB would like to have a weak franc in order to keep exports supported and domestic inflation afloat.
The prospect of ECB easing in March has kept SNB officials on their toes, as they have recently jawboned the franc and said that it is still overvalued. Any indication of currency intervention could drive the franc lower as traders worry that a repeat of their surprise announcement last year might take place.
German factory orders data is due from the euro zone today and a decline is eyed. Weaker than expected readings could spur a downside break, although the pair might not fall so much given the threat of intervention from the SNB.
To contact the reporter of the story: Samuel Rae at email@example.com