Forex Market: EUR/CHF trading forecast for Monday

March 7, 2015 3:03 pm

Friday’s trade saw EUR/CHF within the range of 1.0631 – 1.0759. The pair closed at 1.0695, losing 0.51% on a daily basis. The cross gained 0.21% for the whole week, which partially neutralized the loss from the week ended on February 27th. On Monday (March 9th) EUR/CHF may be influenced by a number of fundamentals, as listed below.

Fundamentals

Euro area

German Balance of Trade

The surplus on German seasonally adjusted trade balance probably narrowed to EUR 21.1 billion during January from a surplus figure of EUR 21.8 billion, registered in December. The latter has been the largest surplus since July 2014, when a figure of EUR 22.2 billion was reported.

Goods to the value of EUR 32.0 billion (a 6.3% increase) were dispatched to the Euro area countries in December, while the value of the goods received from those countries was EUR 31.7 billion (up 0.8%). Exports to countries outside the European Union amounted to EUR 39.3 billion in December (+10.5%), while imports from those countries totaled EUR 24.7 billion (+6.0%), according to Destatis.

German exports probably fell at the seasonally adjusted rate of 1.2% in January compared to December, following an increase by 3.4% in the preceding month.

Seasonally adjusted imports probably rose 0.6% in January from a month ago, after in December they were 0.8% lower.

The trade balance, as an indicator, measures the difference in value between country’s exported and imported goods and services during the reported period. It reflects the net export of goods and services, or one of the components to form the country’s Gross Domestic Product. Generally, exports have a direct link to economic growth, while imports indicate how strong domestic demand is.

Germany registers surpluses on its trade balance on a regular basis, due to the nation’s strong export of automobiles and other machinery. The country also exports chemical products, hardware, electronic equipment, metals and pharmaceuticals, while its main imports include electronic devices, fuel, vehicle parts and metals.

In case the trade balance surplus narrowed more than anticipated, this would have a bearish effect on the euro. Statistisches Bundesamt Deutschland (the Federal Bureau of Statistics) will release the official trade data at 7:00 GMT.

Sentix Investor Confidence

Confidence among investors in the Euro zone probably continued to improve during the current month, with the corresponding index coming in at a reading of 15.0. If so, this would be the highest index value since May 2014, when a level of 12.8 was reported. In February the gauge came in at 12.4. The index is based on results from the SENTIX survey, one of the most prominent surveys, reflecting investors’ opinion in Germany. It encompasses 2 800 respondents, with 510 of them being institutional investors. Respondents present their expectations regarding ten different markets for a period of one and six months. Readings above zero indicate that respondents were predominantly optimistic, while readings below zero show pessimism. Higher-than-expected readings would have a limited bullish effect on the common currency. The official index value is due out at 9:30 GMT.

Switzerland

Retail Sales

At 8:15 GMT the Swiss Federal Statistical Office is to report on the nation’s retail sales in January. Annualized sales at retailers in Switzerland rose at a pace of 2.2% in December, or the fastest annual rate since June 2014, when sales were up 3.3%. In monthly terms, the retail sales index grew 1.0% in December, marking a third straight month of gains. It has also been the fastest monthly rate of increase since August 2014, when retail sales surged 1.8%. This indicator reflects the change in the total value of inflation-adjusted sales by retailers in the country and provides key information regarding the consumer spending trend, while the latter is a major driving force behind economic growth. In case retail sales continued to increase, and especially if they outstripped the most recent monthly rates, this would provide support to the Swiss franc.

Pivot Points

According to Binary Tribune’s daily analysis, the central pivot point for the pair is at 1.0695. In case EUR/CHF manages to breach the first resistance level at 1.0759, it will probably continue up to test 1.0823. In case the second key resistance is broken, the pair will probably attempt to advance to 1.0887.

If EUR/CHF manages to breach the first key support at 1.0631, it will probably continue to slide and test 1.0567. With this second key support broken, the movement to the downside will probably continue to 1.0503.

The mid-Pivot levels for Monday are as follows: M1 – 1.0535, M2 – 1.0599, M3 – 1.0663, M4 – 1.0727, M5 – 1.0791, M6 – 1.0855.

In weekly terms, the central pivot point is at 1.0694. The three key resistance levels are as follows: R1 – 1.0767, R2 – 1.0839, R3 – 1.0912. The three key support levels are: S1 – 1.0622, S2 – 1.0549, S3 – 1.0477.

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