EUR/CHF Sellers Aim to Extend Downtrend Amid Economic Uncertainty

Market Overview

As of early September 2024, EUR/CHF remains under pressure, driven by macroeconomic conditions and the European Central Bank’s (ECB) monetary policy stance. The euro is weighed down by slower-than-expected growth across the eurozone, while the Swiss franc benefits from its status as a safe-haven asset amidst global uncertainties.

Switzerland’s economic stability, coupled with the Swiss National Bank’s (SNB) cautious monetary approach, has kept the franc attractive to investors. Despite some inflationary pressures, the SNB has shown willingness to intervene in currency markets if the franc strengthens excessively. However, there has been no significant intervention recently.

Moreover, the global risk-off sentiment, exacerbated by geopolitical tensions and economic uncertainties, continues to favor the Swiss franc. Investors seeking safety have driven demand for the franc, adding further downward pressure on the EUR/CHF pair.

Technical Analysis

EUR/CHF is trading within a well-defined downtrend on the daily chart, sitting below both the 34-period and 100-period moving averages. Sellers are currently testing the key support at 0.93522. If this support breaks, it could pave the way for further declines toward 0.93270. Beyond that, the next major support zone lies between 0.92948 and 0.92594. In an extended bearish scenario, sellers may ultimately target the historical low of 0.92020.

Oscillator Confirmations:

RSI: Currently in the bearish zone, indicating sustained selling pressure.

MACD: Bearish momentum remains intact as MACD lines stay below the signal line, supporting further downside.

Moving Averages: Both the 34-period and 100-period moving averages confirm the prevailing bearish trend.

Alternative Scenario

However, should buyers defend the 0.93522 support level, the next challenge will be to break above short-term trendline resistance at 0.93786. A sustained move above this level could bring the 0.94450 resistance, where the 34-day moving average and a recent price ceiling converge, into play. Only a decisive breakout above this cluster would invalidate the bearish outlook.

Key Levels Overview

• Resistance Levels:
  • Resistance 2: 0.94450
  • Resistance 1: 0.93876
• Current Price: 0.93704
• Support Levels:
  • Support 1: 0.93522
  • Support 2: 0.93270
  • Support 3: 0.92948
  • Support 4: 0.92594
  • Support 5: 0.92020

Key Events to Watch

Investors should keep a close eye on the ECB’s upcoming rate decision later this week. Monday evening’s speech by ECB board member Isabel Schnabel could offer further insights into the bank’s future policy direction. Additionally, Germany’s inflation data on Tuesday will play a crucial role in shaping the ECB’s commitment to its ongoing rate cut cycle.

Conclusion

EUR/CHF remains in a strong downtrend, driven by economic headwinds in the eurozone and demand for the safe-haven Swiss franc. The pair’s technical indicators point to further downside unless key supports are defended. Market participants should monitor upcoming ECB and German inflation data, which will likely shape the near-term trajectory of this pair.