The EUR/CHF currency pair on Friday failed to build on yesterday’s gains. The pair pulled back off 1.0559 after bouncing off the 1.0524 support level. The currency pair has been trading in a highly volatile bearish wedge since failing in an attempted reversal of the trend at the start of the month.
The currency is now pegged below the 100-hour SMA while the 200-hour SMA is a few more pips higher. Given the position of the 60-min RSI indicator, volatility could continue through next week.
EUR/CHF Fundamentals Overview
From a fundamental perspective, the EUR/CHF currency pair is trading at the back of a relatively busy period in the global financial markets. Europe has now become the epicenter of the coronavirus outbreak. Italy tops the list of the most affected countries in the Eurozone followed by Spain, Germany, and France. These four drive the performance of the EU economy. On the other hand, Switzerland has kept the death rate significantly lower and appears to be managing the coronavirus pandemic better.
Based on the latest round of economic data, the Eurozone has relatively underperformed the estimates. Labor cost for Q4 gained 2.4% versus an expectation of 3% while ZEW Survey economic sentiment for March missed 34.5 with -49.5. The consumer price index for February matched expectations on all counts while the trade balance for January disappointed. Construction output for January beat expectations but current account balance came short.
In Switzerland, producer and import prices for February missed expectations while the SNB chose to keep the base interest rate unchanged at -0.75%.
EUR/CHF Technical Analysis (the 60-min Chart)
Technically, the EUR/CHF currency pair appears to be trading under significant bearish pressure in a highly volatile wedge. The pair appears to be facing strong resistance off the 100-hour SMA in the 60-min chart. This supports a continuation of the current bearish run.
Therefore, the bears will be targeting short-term profits at around 1.0533 or lower at 1.0524. On the other hand, the bulls will look to pounce on rebound profits at around 1.0550 or higher at 1.0560.
EUR/CHF Technical Analysis (the Daily Chart)
In the daily chart, the EUR/CHF currency pair appears to be trading ina descending channel. This shows a consistent build-up in selling pressure. The pair has recently dropped to touch the trendline support at around 1.0640. This could trigger a rebound with shorts looking to cover their positions.
The bulls will target long-term rebound profits at around 1.0700 or higher at 1.0846. On the other hand, the bears will look to retain control by targeting profits at around 1.0386 or lower at 1.0243.