Forex Market: EUR/CHF daily trading forecast

Yesterday’s trade saw EUR/CHF within the range of 1.2073-1.2107. The pair closed at 1.2086, losing 0.15% on a daily basis.

At 6:52 GMT today EUR/CHF was up 0.08% for the day to trade at 1.2097. The pair touched a daily high at 1.2099 at 6:51 GMT.

Fundamental view

Euro zone

Euro zones final HICP

The annualized final consumer price index in the Euro zone, evaluated in accordance with Eurostat’s harmonized methodology, probably confirmed the preliminary HICP of 0.3% in August, according to the median estimate by experts. If confirmed, this would be the lowest level of the HICP since October 2009. The Services category is expected to have the highest annual rate in August, or 1.2%, compared with 1.3% in July, and non-energy industrial goods (0.3%, compared with 0.0% in July), according to data by Eurostat.

The index shows the change in price levels of a basket of goods and services from consumer’s perspective and also reflects purchasing trends. The main components of the HICP are food, alcohol and tobacco (accounting for 19% of the total weight), energy (11%), non-energy industrial goods (29%) and services (41%).

The HICP is used to evaluate and compare inflation rates between Member States, according to Art. 121 of the Amsterdam’s Agreement and directives by the European Central Bank (ECB), in order the latter to achieve price stability and the implementation of monetary policy. The HICP aggregates are calculated as the weighted average of each member state’s HICP components. The weight of each state is presented by its share of household final monetary consumption expenditure in the total of the country’s group.

In case the HICP slowed down more than anticipated, thus, distancing from the 2% inflation objective set by the ECB, this would mount selling pressure on the euro, because of the greater possibility of introducing additional monetary policy measures in order to stimulate economy.

The annualized final Core HICP for August probably matched the preliminary Core HICP, reported at 0.9% on August 29th. In July annualized core inflation was reported at 0.8%. This index excludes volatile categories such as food, energy, alcohol and tobacco. Eurostat is scheduled to release the official inflation data at 9:00 GMT.

Italian Balance of Trade

Italy probably produced a surplus of 2.470 billion EUR in June and another surplus of 1.330 billion EUR in July on its trade balance, according to market expectations. Nations trade surplus shrank to 3.67 billion EUR in May this year, compared with a surplus figure of 3.89 billion EUR in May 2013, as total imports rose 0.9% to reach 30.95 billion EUR. At the same time, total exports expanded at an annualized pace of 0.2% to 34.63 billion EUR in May.

In case of contracting trade surplus, this might have a bearish effect on the single currency. The National Institute of Statistics (ISTAT) is to release the official trade data at 8:00 GMT.

Euro zone Construction Output

At 9:00 GMT Eurostat is to report on construction activity in the Euro zone for July. Seasonally adjusted construction output in the region decreased 0.7% in June compared to a month ago. In annual terms, output expanded 0.3% in June. This indicator reflects how resilient construction sector development is and also provides clues over investment activity. Higher rates of increase in output usually support the common currency.

Switzerland

At 9:00 GMT the ZEW Institute is to report on economic sentiment in Switzerland for September. In August the index came in at a reading of 2.5. The ZEW (Zentrum für Europäische Wirtschaftsforschung) economic expectations index is published on a monthly basis. The study encompasses up to 350 financial and economic analysts. The indicator reflects the difference between the number of analysts, that are optimistic and those, that are pessimistic about the expected economic development in Switzerland over the next six months. A positive value indicates that the proportion of optimists is larger than that of pessimists. A ZEW reading of -100 suggests that all analysts are pessimistic about the current developments and expect economic conditions to deteriorate. A ZEW reading of 100 implies that all analysts are optimistic about the current situation and expect conditions to improve. A ZEW reading of 0 indicates neutrality. Higher than projected readings would have a bullish effect on the franc.

Technical view

According to Binary Tribune’s daily analysis, the central pivot point for the pair is at 1.2089. In case EUR/CHF manages to breach the first resistance level at 1.2104, it will probably continue up to test 1.2123. In case the second key resistance is broken, the pair will probably attempt to advance to 1.2138.

If EUR/CHF manages to breach the first key support at 1.2070, it will probably continue to slide and test 1.2055. With this second key support broken, the movement to the downside will probably continue to 1.2036.

The mid-Pivot levels for today are as follows: M1 – 1.2046, M2 – 1.2063, M3 – 1.2080, M4 – 1.2097, M5 – 1.2114, M6 – 1.2131.

In weekly terms, the central pivot point is at 1.2087. The three key resistance levels are as follows: R1 – 1.2136, R2 – 1.2167, R3 – 1.2216. The three key support levels are: S1 – 1.2056, S2 – 1.2007, S3 – 1.1976.