Fresh Prospects for CHF/JPY as Short-Term Ascending Channel Breaks
Monday Market Overview:
The Bank of Japan’s (BOJ) quarterly report released on Monday indicates that companies are struggling with higher costs due to the yen’s depreciation and weakening consumer sentiment. Despite this, the BOJ maintains that the local economy is improving in most regions. The yen remains near its lowest level against the dollar in 38 years, indicating higher costs for Japanese companies importing food and energy, leading to reduced consumer purchasing power. Consequently, the yen continues to decline against the dollar, while the strengthening Swiss franc encourages CHF/JPY buyers to increase their market presence.
Technical Analysis:
On the hourly chart, CHF/JPY is attempting to confirm a breakout from its short-term ascending channel. Buyers have pushed the price above the key level of 179.691, awaiting confirmation from the current trading session to solidify their advance towards the immediate target of 179.873. Sustained bullish momentum above this area could drive the price towards resistance levels at 180.105 and 180.361.
Alternative Scenario:
If sellers regain control below the 179.691 level, now a significant support, a downward move towards the moving averages and support at 179.435 is likely. Extended declines within the ascending channel could bring the price to the lower support level at 179.021.
Key Levels:
Resistance Levels:
- Resistance 3: 180.361
- Resistance 2: 180.105
- Resistance 1: 179.873
Current Price (at the time of analysis): 179.768
Support Levels:
- Support 1: 179.691
- Support 2: 179.435
- Support 3: 179.021
Impactful Events:
Many analysts expect the BOJ to soon raise short-term interest rates amid ongoing inflation. The BOJ Policy Board’s next meeting is scheduled for July 30-31. Despite an improved current account balance, yen buyers remain cautious. The BOJ’s bond auction on Tuesday and the Producer Price Index (PPI) report for June on Wednesday are key events to watch.
Oscillators and Risk Warnings:
- RSI (Relative Strength Index): Bullish, indicating strong buying momentum.
- MACD (Moving Average Convergence Divergence): Bullish, supporting the upward trend.
- Moving Averages: Bullish, reflecting the current positive price action.
Conclusion:
The CHF/JPY pair is showing strong bullish momentum following a breakout from its short-term ascending channel. A confirmed break above 179.691 could lead to further gains towards 179.873, 180.105, and 180.361. However, if sellers regain control, the price may fall towards 179.435 and potentially down to 179.021. The market will closely watch upcoming BOJ policy moves, bond auctions, and the PPI report for further direction.
Investors should remain vigilant to these key events and technical levels to navigate the current market environment effectively.