USD/CHF Soars As Eurozone Risk Abates
IronFX Strategy Team | Aug 14, 2013 11:56AM ET
• Today’s announcement of higher-than-expected growth in France, Germany and the EU as a whole during Q2 has bolstered confidence that the long Eurozone recession is coming to an end. Even beleaguered Portugal registered stunning growth of 1.1% qoq, ending 10 consecutive quarters of contraction. With confidence coming back to the Eurozone, safe-haven demand for CHF diminished and both EUR/CHF and USD/CHF moved higher during the European morning. We expect that they will continue to do so and see EUR/CHF in particular as a relatively low-risk trade, with USD/CHF offering more volatility.
• During the last hours’ trading activity the bulls boosted USD/CHF up, penetrating aggressively the 0.9348 (S1) level, currently heading towards the next hurdle at 0.9388 (R1). It seems that the pair has the necessary momentum to challenge that level, since the ADX reading is above 20, indicating further upward movement, confirmed by the +DI being over the -DI. Moreover, the price is trading above both the 20- and 200-hours moving averages, confirming the bullish picture of the pair. However, the price has been pushed far away from the uptrend line and a possible correction towards it at some point in the future would not surprise us.
• Support: Support is found at the 0.9348 (S1) level, followed by the 0.9322 (S2) and 0.9284 (S3) respectively.
• Resistance: Resistance is at early August highs of 0.9388 (R1), followed by the 0.9477 (R2) and 0.9535 (R3), found from the daily chart.
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