Forex Market: EUR/CHF daily trading forecast

Yesterday’s trade saw EUR/CHF within the range of 1.2046-1.2081. The pair closed at 1.2067, losing 0.01% on a daily basis.

At 6:38 GMT today EUR/CHF was down 0.04% for the day to trade at 1.2058. The pair touched a daily low at 1.2056 at 6:10 GMT.

Fundamental view

Euro zone

Manufacturing PMI data by Markit

Activity in Italys sector of manufacturing probably remained in the zone of contraction in September, with the corresponding PMI coming in at a reading of 49.5, as expected by experts, from 49.8 in August. The PMI has been decreasing since April. Values below the key level of 50.0 indicate pessimistic outlook (contracting activity). Markit Economics is expected to release the official data at 7:45 GMT.

Frances final manufacturing PMI probably confirmed the preliminary reading for September, reported at 48.8 on September 23rd. If so, this would be the fifth consecutive month, during which the index stays in the zone of contraction, after in March and April the PMI climbed above 50.0. The official reading is due out at 7:50 GMT.

The final reading of German manufacturing PMI probably confirmed the preliminary value for September, with the index coming in at 50.3. In August it stood at 51.4. The index has been falling gradually since January. Markit will release the official reading at 7:55 GMT.

The final manufacturing PMI in the Euro zone probably also confirmed the preliminary value in September, with the index remaining at 50.5. In August it came in at 50.7, or the lowest reading since October 2013. The official value is scheduled to be released at 8:00 GMT. The PMI is based on a monthly survey, encompassing a sample of business entities, which represents private sector conditions in terms of new orders, output, employment, prices etc. Lower than expected readings would mount selling pressure on the common currency.

Disappointing inflation data

Annualized consumer inflation in the Euro zone continued to fall in September, distancing further from the 2% inflation objective, set by the European Central Bank, which provides price stability. The preliminary Harmonized Index of Consumer Prices (HICP) dropped to the annual level of 0.3% in September, which has been the lowest since October 2009, from 0.4% in August. This drop in inflation pressure may be another obstacle for the central bank, after in early September the latter introduced a series of measures, aimed to spur growth in the Euro area. It may still be quite early for these measures to take effect, but, however, sliding inflation rate poses a threat of reducing, to an extent, this effect. Consumer inflation has remained below 1% for the past 12 months.

Following the release of the official report by Eurostat yesterday, EUR/USD plunged 0.67% to reach a daily low at 1.2602, which has also been the pairs lowest level since September 6th 2012. Later in the day the pair extended losses, tumbling to 1.2571.

Switzerland

Activity in Switzerland’s manufacturing sector was probably little changed in September. The SVME Manufacturing Purchasing Managers Index (PMI) probably dropped to a reading of 52.5 last month, according to the median forecast by experts, from 52.9 in August. If so, this would be the lowest reading since May. This indicator provides clues over growth of production in the country. The PMI is based on a monthly survey, where participants can either respond with “better”, “same”, or “worse” to the questions about the industry, in which they operate. The resulting PMI value is measured from 0 to 100. If the index shows a value of 100.0, this means that 100% of the respondents reported an improvement in conditions. If the index shows a value of 0, this means that 100% or the respondents reported a deterioration in conditions. If 100% of the respondents saw no change in conditions, the index will show a reading of 50.0. Therefore, values above 50.0 are indicative of optimism (expansion in the sector). Lower than expected PMI readings might have a bearish effect on 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 1.2065. In case EUR/CHF manages to breach the first resistance level at 1.2083, it will probably continue up to test 1.2100. In case the second key resistance is broken, the pair will probably attempt to advance to 1.2118.

If EUR/CHF manages to breach the first key support at 1.2048, it will probably continue to slide and test 1.2030. With this second key support broken, the movement to the downside will probably continue to 1.2013.

The mid-Pivot levels for today are as follows: M1 – 1.2022, M2 – 1.2039, M3 – 1.2057, M4 – 1.2074, M5 – 1.2092, M6 – 1.2109.

In weekly terms, the central pivot point is at 1.2073. The three key resistance levels are as follows: R1 – 1.2092, R2 – 1.2112, R3 – 1.2131. The three key support levels are: S1 – 1.2053, S2 – 1.2034, S3 – 1.2014.