The EUR/CHF currency pair on Friday plunged to trade at new 9-month lows of about 1.0700 following the latest round of EU manufacturing data. The currency pair has been trading within a descending channel since late last year amid increased bearish pressure.
The pair is now trading on the edge of the oversold boundary following today’s decline and this could continue through next week pending a rebound.
EUR/CHF Fundamentals Overview
From a fundamental perspective, the EUR/CHF currency pair is trading at the back of a significantly busy period in the EU market. With the World Davos Economic Forum continuing in the Alps in Switzerland, there was nothing much to report. However, it was business as usual for the rest of Europe with key economic data trickling in during the week.
On Thursday, the EU chose to keep the base interest rate unchanged at 0.0% while the deposit rate was held at -0.5%. The preliminary Consumer Confidence Index for January missed the expectation of -7.8 with -8.1. And on Friday, the Markit Manufacturing Index beat the expectation of 46.8 with 47.8. On the other hand, both the Services PMI and the PMI Composite missed 52.8 and 51.2 with 52.2 and 50.9, respectively.
The German Markit PMIs beat on all counts while the French PMIs matched the outcome of the EU PMIs. And on Wednesday, Italian Industrial Sales beat expectations while Induatrial Orders cam short.
EUR/CHF Technical Analysis (the 60-min Chart)
Technically, the EUR/CHF currency pair appears to be trading under extreme bearish pressure following this week’s plunge. The pair is now trading several levels below the 100-hour and the 200-hour SMA lines. This indicates a short-term bearish bias in the market sentiment.
Therefore, the bears will be targeting short-term profits at around 1.0700 or lower at 1.0690. On the other hand, the bulls will be targeting rebound profits at around 1.0713 or higher at 1.0722.
EUR/CHF Technical Analysis (the Daily Chart)
In the daily chart, the EUR/CHF currency pair appears to be trading within a sharply descending channel that extends back to late last year. This indicates a long-term bearish bias in the market sentiment. The pair has also crossed over to the oversold region of the RSI indicator in the daily chart. This could trigger the next rebound.
Therefore, the bulls will be targeting long-term profits at around 1.0750, 1.0804 or higher at 1.0871. On the other hand, the bears will look to retain control by targeting profits at around 1.0659 or lower at 1.0603.