Forex Market: EUR/CHF daily trading forecast

Yesterday’s trade saw EUR/CHF within the range of 0.9842-1.0033. The pair closed at 0.9888, losing 0.77% on a daily basis, which also marked a third consecutive daily drop.

At 7:54 GMT today EUR/CHF was down 0.08% for the day to trade at 0.9894. The pair touched a daily low at 0.9868 at 6:00 GMT.

Fundamentals

Euro zone

Manufacturing and Services PMI – preliminary data

Frances manufacturing PMI probably remained in the zone of contraction for a ninth consecutive month in January, with the preliminary index estimate being at 48.1, according to the median forecast by experts. The final PMI stood at 47.5 in December, as reported on January 2nd, down from a preliminary reading of 47.9. Decembers PMI level has been the lowest since August 2014, when the final index was reported at 46.9. Values below the key level of 50.0 indicate that the majority of respondents in the survey expressed pessimism in regard to activity in the sector. Markit Economics is expected to release the preliminary figure at 8:00 GMT.

French preliminary services PMI was probably little changed in January, ticking up to 50.7 from a final reading of 50.6 in the prior month. If so, this would be the highest PMI reading since March 2014, when the final index value was reported at 51.5. Markit will publish the preliminary data at 8:00 GMT.

German manufacturing Purchasing Managers Index probably showed improvement in January, with the preliminary index value rising to 51.7, from a final reading of 51.2 in December, as reported on January 2nd. If so, this would be the highest PMI reading since July 2014, when a final estimate of 52.4 was registered. The preliminary value is due out at 8:30 GMT.

Activity in German services sector probably increased in January, with the preliminary PMI climbing to 52.5 from a final reading of 52.1 in December. If so, this would be the twentieth consecutive month, when the PMI stood in the zone of expansion. The preliminary data is to be released at 8:30 GMT.

Manufacturing activity in the whole Euro region probably expanded in January, with the preliminary Purchasing Managers Index coming in at 51.0 from a final value of 50.6 during the preceding month. If so, this would be the highest reading since July 2014, when the final index was reported at 51.8, and also a nineteenth consecutive month of expansion. The PMI reflects the performance of the manufacturing sector in the area and is based on a survey of 3 000 manufacturing companies. National data are included for Germany, France, Italy, Spain, the Netherlands, Austria, the Republic of Ireland and Greece. These member states together account for almost 90% of Euro zones manufacturing activity. The Manufacturing Purchasing Managers Index is comprised by five individual indexes with the following weights: New Orders (30%), Output (25%), Employment (20%), Suppliers’ Delivery Times (15%) and Stock of Items Purchased (10%), as the Delivery Times index is inverted, so that it moves in a comparable direction. The preliminary data is expected at 9:00 GMT.

The preliminary services PMI in the Euro zone probably also showed improvement in January, reaching a level of 52.0. In December the final reading of the index was reported to have been at 51.6. If market expectations were met, this would be the eighteenth consecutive month, during which the index stood above the key level of 50.0. The PMI is based on data collected from a representative panel of around 2 000 private service sector companies. National services data are included for Germany, France, Italy, Spain and the Republic of Ireland. The survey represents private sector conditions in terms of new orders, output, employment, prices etc. Markit will release the preliminary data at 9:00 GMT.

A larger-than-expected improvement in any of the PMI readings would certainly provide support to the common currency.

ECB decision, Greek election

On January 25th Greece is expected to conduct a general election, that will decide whether the most-indebted country in Europe will continue to follow the austerity policy. Alexis Tsipras, the leader of the opposing Syriza group, has said that his party will abandon the budget constraints.

“The Greek election provides another reason to sell euro in case the ECB decision was not enough,” said Sean Callow, a currency strategist at Westpac Banking Corp. in Sydney, cited by Bloomberg. “A period of consolidation in the mid-$1.13 is reasonable today, but there is no reason to believe a low is in place.”

Meanwhile, yesterday the euro plunged against most of its major peers, after the European Central Bank announced a plan to purchase EUR 60 billion ($68 billion) every month in public and private debt, with the program expected to end in September 2016.

Pivot Points

According to Binary Tribune’s daily analysis, the central pivot point for the pair is at 0.9921. In case EUR/CHF manages to breach the first resistance level at 1.0000, it will probably continue up to test 1.0112. In case the second key resistance is broken, the pair will probably attempt to advance to 1.0191.

If EUR/CHF manages to breach the first key support at 0.9809, it will probably continue to slide and test 0.9730. With this second key support broken, the movement to the downside will probably continue to 0.9618.

The mid-Pivot levels for today are as follows: M1 – 0.9674, M2 – 0.9770, M3 – 0.9865, M4 – 0.9961, M5 – 1.0056, M6 – 1.0152.

In weekly terms, the central pivot point is at 1.0549. The three key resistance levels are as follows: R1 – 1.1398, R2 – 1.2862, R3 – 1.3711. The three key support levels are: S1 – 0.9085, S2 – 0.8286, S3 – 0.6772.