The advanced 1Q GDP reading for the Euro-Zone is expected to reinforce a weakening outlook for the region, and fears of a deepening downturn is likely to weigh on the exchange rate as the European Central Bank maintains a dovish policy stance and looks beyond the interest rate to manage monetary policy.
[B]Currency Pair:[/B] EUR/CHF
[B]Chart:[/B] 60 Min Charts
[B]Short-Term Bias:[/B] Flat
[B][U]Analysis[/U][/B]
The advanced 1Q GDP reading for the Euro-Zone is expected to reinforce a weakening outlook for the region, and fears of a deepening downturn is likely to weigh on the exchange rate as the European Central Bank maintains a dovish policy stance and looks beyond the interest rate to manage monetary policy. After slipping to a low of 1.4299 in October, the EUR/CHF snapped back to reach a high of 1.5885 on 12/15, but the lack of momentum to retrace the sell-off from the December high paired with expectations for further easing by the ECB is likely to hold the pair within a tight range over the near-term. Nevertheless, as the Swiss National Bank pledges to stem the risks for deflation and attempts to put a floor on the exchange rate, expectations for an intervention could weigh on the low-yielding currency, and we may see investors prop up the EUR/CHF as they anticipate the SNB to increase its purchases of foreign currency. Over the next few hours of trading, the euro-franc is likely to push higher to fill-in the gap from the 120 SMA, and may attempt to retrace the sell-off from the previous week however, falling stock prices could weigh on the broad, and a drop in market sentiment could push the pair lower as risk trends continue to drive price action in the currency market. Be sure to check out other Technical Reports from DailyFX for additional information on the major currency pairs.
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