Forex Market: EUR/CHF daily trading forecast

Fridays trade saw EUR/CHF within the range 1.0431-1.0472. The pair closed at 1.0451, down 0.10% on a daily basis and extending losses from Thursday.

At 7:04 GMT today EUR/CHF was down 0.23% for the day to trade at 1.0427. The pair touched a daily low at 1.0357 at 0:00 GMT. It has been the lowest level since June 29th, when a daily low of 1.0256 was registered.

Fundamentals

Euro area

Greece referendum decision

On Sunday it became clear that 61% of the Greek voters said a sonorous “No” to austerity measures, which the European Central Bank, the International Monetary Fund and the European Commission had required on June 25th. Such a result was, to a certain extent, expected by leaders of business entities in the UK, surveyed by the Institute of Directors (IoD). On July 3rd the IoD revealed that 26% of respondents saw the possibility of Greece withdrawing from the Euro zone as “very likely” in 12 months time.

The referendum vote triggered demand for safe haven assets. The yield on Germanys 10-year government bonds went down six basis points (0.06 percentage point) to reach 0.73% earlier today, which has been the largest drop since June 29th.

“The strength of the ‘no’ vote in the Greek referendum comes as a shock to the market, and all safe-haven trades should benefit,” Peter Chatwell, a strategist at Mizuho International Plc in London, wrote in a note to clients yesterday, as reported by Bloomberg.

Following the vote in the referendum, Greek Minister of Finance, Yanis Varoufakis, announced his leave from the Ministry.

“Soon after the announcement of the referendum results, I was made aware of a certain preference by some European participants, and assorted ‘partners’ for my ‘absence’ from its meetings: an idea that the prime minister judged to be potentially helpful to him in reaching an agreement”, according to Varoufakiss personal blog. “For this reason I am leaving the Ministry of Finance today.”

Sentix Investor Confidence

Confidence among investors in the Euro zone probably fell a third consecutive month in July, with the corresponding index coming in at a reading of 15.0, according to market expectations. In June it stood at 17.1. If so, July would be the seventh consecutive month, during which the gauge occupied positive territory, but it would also be the lowest reading since February, when the gauge was reported at 12.4. 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. Lower-than-expected readings would have a bearish effect on the common currency. The official index value is due out at 8:30 GMT.

Switzerland

Consumer Inflation

Annualized consumer inflation in Switzerland probably remained steady in June at -1.2%, according to the median forecast by experts. Mays annual inflation rate has been the lowest one since July 2009, caused by a drop in costs of transport and furnishings and household equipment. Prices of transport went down 4.5% in May year-on-year, while cost of furnishings and household equipment slumped 2.5%. Additional downward pressure was caused by the recreation and culture category (-2.4%), food and non-alcoholic beverages (-1.2%) and miscellaneous goods and services (-1.0%), according to the report by the Swiss Federal Statistical Office (FSO).

The CPI measures the change in price levels of a basket of goods and services from consumer’s perspective and also provides clues over purchasing trends. In case consumer inflation decelerated more than anticipated and further distanced from the inflation target set by the Swiss National Bank, this would have a negative effect on the franc. The FSO is to release the official CPI report at 7:15 GMT.

Pivot Points

According to Binary Tribune’s daily analysis, the central pivot point for the pair is at 1.0451. In case EUR/CHF manages to breach the first resistance level at 1.0472, it will probably continue up to test 1.0492. In case the second key resistance is broken, the pair will probably attempt to advance to 1.0513.

If EUR/CHF manages to breach the first key support at 1.0431, it will probably continue to slide and test 1.0410. With this second key support broken, the movement to the downside will probably continue to 1.0390.

The mid-Pivot levels for today are as follows: M1 – 1.0400, M2 – 1.0421, M3 – 1.0441, M4 – 1.0462, M5 – 1.0482, M6 – 1.0503.

In weekly terms, the central pivot point is at 1.0430. The three key resistance levels are as follows: R1 – 1.0545, R2 – 1.0639, R3 – 1.0754. The three key support levels are: S1 – 1.0336, S2 – 1.0221, S3 – 1.0127.