EUR/CHF looks ready to turn lower from a short-term inflection point!
Like last Monday, a lack of fresh catalysts have inspired some kind of pullback away from safe havens like gold, USD, JPY, and CHF.
EUR/CHF, in particular, managed to extend an upswing that started last Friday.
What makes the pair more interesting today is that it’s currently trading near today’s Pivot Point level. As you can see, the area coincides with last week’s support and today’s 100 SMA and trend line resistance zones.
EUR/CHF 1-hour Forex Chart by TradingView
Will EUR/CHF attract enough bearish pressure to get rejected from the resistance area?
In a few hours, Eurostat will print a consumer confidence report for the Eurozone. Markets see a slight deterioration from -17.8 in September to -18 in October but a downside surprise may convince EUR traders to price in growth weaknesses in the region.
Traders will also keep close tabs on diplomatic efforts in the Israel-Hamas conflict. Threats of geopolitical conflict contagion in the region could draw in EUR sellers and inspire safe haven buying in favor of CHF.
Finally, traders are on the lookout for the ECB’s monetary policy decision scheduled later this week. Analysts expect President Lagarde and her team to keep their interest rates steady after ten consecutive rate hikes but also push a “higher for longer” stance to discourage higher inflation.
If traders focus on any or a combination of the risk factors above, then EUR/CHF may attract enough bears to keep the pair’s downtrend going. The pair could revisit its October lows or make new monthly lows.
But if safe haven demand continues to pull back in the next trading sessions, or if positive developments in the Israel-Hamas conflict help risk-taking in the Eurozone, then we can also consider EUR/CHF possibly breaking its downtrend. We’ll likely get confirmation if EUR/CHF breaks above its trend line and 100 SMA resistance lines.
It’s still pretty early in the week and it doesn’t seem like traders are willing to commit to a degree of risk-taking just yet. Make sure to read this week’s potential catalysts so you can take note of the potential market movers that may affect your EUR/CHF trade!
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