Short-Term Forex Technical Outlook: EUR/CHF

The EUR/CHF continued to hold a tight range throughout May amid expectations for an intervention by the Swiss National Bank, and price action following the European Central Bank’s interest rate decision later this week could foreshadow a major breakout for the pair as investors weigh the outlook for future 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 EUR/CHF continued to hold a tight range throughout May amid expectations for an intervention by the Swiss National Bank, and price action following the European Central Bank’s interest rate decision later this week could foreshadow a major breakout for the pair as investors weigh the outlook for future policy. After slipping to a low of 1.4299 in October, the euro-franc snapped back to reach a high of 1.5885 on 12/15, but the lack of momentum to push back above 1.5270-80 (38.2% Fib) paired with the dovish outlook held by the ECB could lead the pair lower over the near-term. At the same time, as the SNB attempts to put a floor on the exchange rate, expectations for an intervention could leave the pair range-bound over the near-term as the region faces its worst economic downturn in over a quarter century. Over the next few hours of trading, we are likely to see the EUR/CHF trail lower to fill-in the gap from the 120 SMA, and the pair may work its way towards 1.5090-1.5100 (50.0% Fib) to test for short-term support. However, fears of a deepening downturn may lead the ECB to take additional steps to stimulate the ailing economy, and comments from President Trichet could reinforce a weakening outlook for future policy as growth prospects deteriorate. Be sure to check out other Technical Reports from DailyFX for additional information on the major currency pairs.

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