27 Sep 2013
EUR/CHF still downwards; not excited by solid EZ data
FXstreet.com (Athens) – The EUR/CHF did only initially gained some slight ground after the Euro land sentiment released at its best level since the August of 2011.
The EUR/CHF has been trading sharply downwards the last two days after having broken the 200-EMA amidst an unstable environment of Italian political uncertainty and a sluggish Euro zone growth. Earlier the data released regarding Euro land spurred only initially a slight boost to the pair. It is obvious that while September’s increase in economic sentiment added to mounting evidence that the Euro land economy is getting back again on track, the risk of a near-term relapse in economic activity is clearly looming out. Elaborating on, taking for granted that former Italian PM Berlusconi has created a great “turmoil” in the political stability of Euro land traders should not find out-of-the blue the fact that the Germany-Italy (10year) yield spread is now nearly 13 bps above its 1-month average, while today Italian bond yields rose to 4.5% at 10y auction versus 4.46% in August. Finally the bid-to-cover ratio fell to 1.38 versus 1.52 prior, showing ebbing demand.
Technical Outlook and Strategic Bias on EUR/CHF
The EUR/CHF is trading well under its 200-EMA (1,2287) and a clear daily close below that level, would put the pair “under pressure” further. Karen Jones, Head Technical Analyst at Commerzbank suggests that “the EUR/CHF is trading below its 200 day moving average at 1.2305 and is under pressure. Failure here introduces potential to test the 1.2250 2013 uptrend. This is expected to hold the downside and prompt recovery. Note the 55 week ma is also located here at 1.2245.”
The EUR/CHF has been trading sharply downwards the last two days after having broken the 200-EMA amidst an unstable environment of Italian political uncertainty and a sluggish Euro zone growth. Earlier the data released regarding Euro land spurred only initially a slight boost to the pair. It is obvious that while September’s increase in economic sentiment added to mounting evidence that the Euro land economy is getting back again on track, the risk of a near-term relapse in economic activity is clearly looming out. Elaborating on, taking for granted that former Italian PM Berlusconi has created a great “turmoil” in the political stability of Euro land traders should not find out-of-the blue the fact that the Germany-Italy (10year) yield spread is now nearly 13 bps above its 1-month average, while today Italian bond yields rose to 4.5% at 10y auction versus 4.46% in August. Finally the bid-to-cover ratio fell to 1.38 versus 1.52 prior, showing ebbing demand.
Technical Outlook and Strategic Bias on EUR/CHF
The EUR/CHF is trading well under its 200-EMA (1,2287) and a clear daily close below that level, would put the pair “under pressure” further. Karen Jones, Head Technical Analyst at Commerzbank suggests that “the EUR/CHF is trading below its 200 day moving average at 1.2305 and is under pressure. Failure here introduces potential to test the 1.2250 2013 uptrend. This is expected to hold the downside and prompt recovery. Note the 55 week ma is also located here at 1.2245.”