The EUR/CHF currency pair pulled back on Friday after the German Bundesbank issued a report warning against a drop in exports. The pair had rallied in the early hours to trade at a new monthly high of about 1.1206/9 before pulling back to trade at about 1.1174 in the afternoon.

The currency pair has been trading within an ascending wedge with a flat top since the start of the month. This pattern appears to be consolidating in a triangle formation that could lead to a major breakout.

EUR/CHF Fundamentals Overview

On Friday, the German Bundesbank (the central bank of Germany) issued economic growth warning after it revised its prospects on 2019 and 2020 GDP. The bank now expects the German GDP to grow by 0.6% in 2019 and 1.2% in 2020 compared to December 2018 estimates of 1.6% and 1.6% respectively.

These revisions were made due to a decline in exports, which according to Germany’s Federal Statistics Office declined by 3.7% month-over-month and 0.5% annually in May.

Traders were also not impressed by yesterday’s ECB (European Central Bank) meeting, which was relatively dovish. They will now look ahead to next week’s Swiss National Bank (SNB) meeting.

EUR/CHF Technical Analysis (the 60-min Chart)

From a technical perspective, the EUR/CHF currency pair appears to be trading within an ascending wedge that could be forming a triangle. This could lead to a breakout potentially a bearish one given Germany’s latest report on the economic outlook.

As such, the bears will be more optimistic going into next week and could target profits at around 1.1157. On the other hand, the bulls will hope for a rebound following today’s pullback and could target profits at around 1.1190 from the current level of 1.1175.

EUR/CHF Technical Analysis (the Daily Chart)

In the daily chart, the pair appears to be trading within a sideways channel, which stretches back to August last year.

The recent short-term consolidation came following a major bearish run dating back to May 2019, which suggests that a major rebound could be on the cards in the long-term. This gives the bulls long-term control but the bearish bias will continue to weigh on the pair in the short-term

In summary, the EUR/CHF currency pair faces downward pressure following Germany’s weak data on economic prospects. And with the ECB report interpreted to be weak by traders yesterday, this leaves traders with next week’s SNB report for more guidance.