Selling the Retrace in EURCHF As Global Tensions Remain High
EURCHF has bounced off the support once again, but the main trend is still bearish and the retrace higher might be over at the 50 daily SMA. This moving average has been acting as resistance in 2024, pushing the highs lower, so it’s likely that we might see a bearish reversal from here, as buyers are already showing difficulties pushing the price higher, while geopolitical tensions remain elevated, despite the temporary calm. So, we decided to open a sell forex signal at the 50 SMA at 0.9422.
EUR/CHF Chart Daily – The 50 SMA Keeps Pushing Highs Lower
As financial markets experienced a flash crash and safe havens like the Swiss Franc strengthened, the EUR/CHF saw a bearish reversal, dropping to 0.92 by early August. The pair started 2024 on a bullish note, gaining nearly 7 cents by May, almost reaching parity. However, after the crash, support has now settled between 0.9340 and 0.9350. Although the pair has rebounded over the last two trading days, sellers still dominate as lower highs continue to form.
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EUR/CHF Market Trends Amid Risk-Off Sentiment
In early August, EUR/CHF dropped to the 0.9210 support level during a global risk-off phase, making this level crucial to watch ahead of the 0.9 mark. Although there was a brief recovery, adding roughly 4 cents, the gains were short-lived due to global uncertainties like weak economic data and rising geopolitical tensions in the Middle East.
China’s Economic Data and Impact on Safe Havens
Over the weekend, China released import inflation data indicating that the Producer Price Index (PPI) continues to fall and the Consumer Price Index (CPI) has cooled. The trade balance also weakened, highlighting continued sluggish domestic demand, raising concerns over deflationary pressures that could benefit safe havens like the CHF and weigh on riskier currencies.
The Swiss Franc, however, is lagging today, with USD/CHF up 0.7% to 0.8641 and EUR/CHF up 0.5% to 0.9425. This raises speculation on whether the Swiss National Bank (SNB) may be intervening. If the SNB has stepped in, the bullish momentum might lose steam once their involvement ceases.
Geopolitical Tensions and CHF Reaction
Geopolitical tensions remain high as the conflict between Israel and Hezbollah escalates. With sirens sounding south of Tel Aviv and reports of strikes near northern Israel, Israel has informed the US of its intent to respond decisively to recent attacks. These developments could sustain tensions, possibly helping EUR/CHF turn around at the 50-day SMA, supporting the case for the pair to drop lower, which aligns with a bearish outlook on EUR/CHF.
EUR/CHF Live Chart
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