EURCHF has been slowly treading lower on its short-term time frames, as the lack of progress in the Greek debt talks is starting to weigh on the shared currency. Price is moving inside a descending trend channel and has just bounced off the resistance at 1.0500.
Price could fall back to the channel support at the 1.0400 major psychological level from here, as RSI is pointing down and indicating a return in bearish pressure. Stochastic is on the move up though, which suggests that another test of resistance might still be possible.
The simple moving averages confirm that the downtrend could carry on since the 100 SMA is treading below the 200 SMA for now.
Event risks for this setup include updates on the Greek debt talks as usual. EU leaders have been unable to come up with a deal in their latest meeting, prompting them to schedule an emergency summit for early next week. The lack of developments by then could result to more euro weakness and even a break below the EURCHF channel support if markets come to terms with the idea of a Grexit.
On the other hand, a compromise between the Greek government and its lenders could lead to euro rallies and a potential upside channel break for this pair. Note that Greece has several debt obligations due over the next few weeks and the release of the bailout funds would help them stay avert a default.
As for Switzerland, the recently held SNB monetary policy statement didn’t have any surprises, as the leaders simply jawboned their currency but refrained from taking actual monetary policy action. With that, the path of least resistance might stay to the downside.
This week, the EU emergency meeting and summit could push euro pairs around, as the outcome of the Greek debt negotiations could set the longer-term trend for the shared currency.
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