Forex Market: USD/CHF daily trading forecast

Friday’s trade saw USD/CHF within the range of 0.9563-0.9709. The pair closed at 0.9694, gaining 1.18% on a daily basis.

At 8:13 GMT today USD/CHF was down 0.04% for the day to trade at 0.9696. The pair touched a daily low at 0.9692 at 7:40 GMT.

Fundamentals

United States

Services PMI data by Markit

Activity in the US sector of services was probably little changed in November, with the corresponding preliminary Purchasing Managers’ Index coming in at a reading of 56.9. If so, this would be the lowest index reading since April, when the final value was reported at 55.0. In September the final seasonally adjusted PMI stood at 57.1, down from a preliminary value of 57.3. The PMI is based on data collected from a representative panel of more than 400 private sector companies, which encompasses industries such as transport and communication, financial intermediaries, business and personal services, computing & IT and hotels and restaurants. Values above the key level of 50.0 indicate optimism (expanding activity). Lower-than-expected PMI readings would mount selling pressure on the US dollar. The preliminary data by Markit Economics is due out at 14:45 GMT.

SNB under pressure as Libor almost touches zero

The reference interest rate of the Swiss National Bank (SNB) dropped to its lowest level in over 20 years, which suggested market players lie in wait for additional policy measures, aimed to curb francs recent strength. The three-month Swiss franc Libor, the market interest rate the central bank targets, fell to 0.002% last week, or the lowest level since 1990.

“The market is anticipating SNB action,” said Peter Rosenstreich, head of market strategy at Swissquote Bank SA in Gland, Switzerland, cited by Bloomberg. “They’re starting to price in negative rates very aggressively.”

Due to Switzerland’s permanent excess liquidity, possible negative rates would cause a larger impact in Switzerland than in the Euro zone, according to SNB Governing Board Member Fritz Zurbruegg. The central bank has a target range of 0% to 0.25% for the Libor rate, which reflects the cost of lending between banks.

Pivot Points

According to Binary Tribune’s daily analysis, the central pivot point for the pair is at 0.9655. In case USD/CHF manages to breach the first resistance level at 0.9748, it will probably continue up to test 0.9801. In case the second key resistance is broken, the pair will probably attempt to advance to 0.9894.

If USD/CHF manages to breach the first key support at 0.9602, it will probably continue to slide and test 0.9509. With this second key support broken, the movement to the downside will probably continue to 0.9456.

The mid-Pivot levels for today are as follows: M1 – 0.9483, M2 – 0.9556, M3 – 0.9629, M4 – 0.9702, M5 – 0.9775, M6 – 0.9848.

In weekly terms, the central pivot point is at 0.9645. The three key resistance levels are as follows: R1 – 0.9759, R2 – 0.9825, R3 – 0.9939. The three key support levels are: S1 – 0.9579, S2 – 0.9465, S3 – 0.9399.

The outlook for the pair remains bullish. The perfect order of the 25-day (blue), 50-day (red) and 200-day (white) Exponential Moving Averages is still present, while the +DI line (green) is still above the -DI line (red). If the high of November 11th is breached, the bull trend may continue. If not, the trend started on May 7th may end in a trading range. Breakouts from ranges may occur in either direction!