USD/CHF Weekly Outlook - January 5th to 9th, 2015
USD/CHF broke over the parity level and went as high as 1.0018 before closing for the week bullishly at 1.0016.
During the last week there was only one economic release from the Switzerland and that was for the UBS consumption indicator for November. The data came out weaker at 1.29 as compared to the previous month's 1.32.
The U.S. data showed that the consumer confidence further improved from 91.00 to 92.6 and the pending home sales which grew to 4.1% from previous month's 2.1%. However the month over month construction spending witnessed a decline from 1.2% to -0.3% during the same month. The initial jobless claims from U.S. came out weak with 298K against the previous 281K. Markit manufacturing PMI from the U.S., for December, also came out weaker at 53.9 as compared to previous month's 54.8. ISM manufacturing PMI also witnessed a decline from 58.7 to 55.5 in December
The price-action not only broke over the critical resistance level of July 2012 i.e. 0.9072 but also the 61.8% retracement of the gains from 0.7069 to 1.1731 i.e. 0.9950. The break over the parity level indicate the strong bullish sentiments for USD/CHF. The negative correlation with EUR/USD and the negative sentiments from the euro-zone further strengthen this bullish outlook for the currency pair.
On the downside we expect a support at 0.9920 now. On 4-hourly chart, the resistance at 0.9920 of December 30th seems to have turned into a support as witnessed during the last week. With this support holding the next target should be the resistance zone of 1.0060 to 1.0080. In this zone the psychological resistance of moving out of 1.0000 ranges should come into the picture. Near this level we would expect some sideways move and even the possibilities of some downward corrections would not be ignored.
On the down side, if there is any decisive break of 0.9920 support then the consolidation should extend towards the next support zone of 0.9784 to 0.9905 of the last to last week. The recent trend has been a support near or just below the 55-day EMA during any major correction. The current 55-day EMA is at 0.9746 and in case the support of 0.9784 fails then the correction should extend towards 0.9720 to 0.9740 support zone.
From the longer-term perspective, the break over 0.9072 and then the parity level clearly suggests some significant gains in the coming days/months. Such gains may extend towards the support zone of March and April of 2010 i.e. 1.0436 to 1.0490. This previous support should now act as resistance. The psychological resistance of 1.0500 ranges will also come into the picture there.
Analyze Yourself - Various views of USD/CHF Price-Action