Forex Market: EUR/CHF trading forecast for Monday

During Friday’s trading session EUR/CHF traded within the range of 1.2155-1.2171 and closed at 1.2165, losing 0.03% for the day, but gaining 0.12% on a weekly basis.

Fundamental view

Euro zone

Confidence among investors in the Euro zone was probably lower during the current month, with the corresponding index coming in at a reading of 9.0. In July it stood at 10.1. The index is based on results from the SENTIX survey, one of the most prominent surveys, reflecting investors’ opinion in Germany. It encompasses 2 800 respondents, with 510 of them being institutional investors. Respondents present their expectations regarding ten different markets for a period of one and six months. Readings above zero indicate that respondents were predominantly optimistic, while readings below zero show pessimism. Higher than expected readings would provide support to the common currency. The official result is expected at 8:30 GMT on Monday.

At the same time, the annualized index of producer prices (PPI) in the Euro zone probably reached -1.0% in June, according to the median estimate by experts, from -1.0% in May. This index reflects the change in prices of products, sold by manufacturers during the respective period. The PPI differs from the CPI, which measures the change in prices from consumer’s perspective, due to subsidies, taxes and distribution costs of different types of manufacturers in the region. In case producers are forced to pay more for goods and services, they are more likely to pass these higher costs to the end consumer. Therefore, the PPI is considered as a leading indicator of consumer inflation. Lower than expected producer prices would have a bearish effect on the euro. Eurostat is to release the official report at 9:00 GMT on Monday.

Switzerland

Activity in Switzerland’s manufacturing sector probably slowed down during July. The SVME Manufacturing Purchasing Managers Index (PMI) probably fell to a reading of 52.8 last month, according to the median forecast by experts, from 54.0 in June. This indicator provides clues over growth of production in the country. Values above 50.0 are indicative of expansion in the sector. Therefore, higher than expected PMI readings would support the franc. The SVME (Schweizerischer Verband für Materialwirtschaft und Einkauf) in cooperation with Credit Suisse will release the official data at 7:30 GMT.

Technical view

According to Binary Tribune’s daily analysis, the central pivot point for the pair is at 1.2164. In case EUR/CHF manages to breach the first resistance level at 1.2172, it will probably continue up to test 1.2180. In case the second key resistance is broken, the pair will probably attempt to advance to 1.2188.

If EUR/CHF manages to breach the first key support at 1.2156, it will probably continue to slide and test 1.2148. With this second key support broken, the movement to the downside will probably continue to 1.2140.