USD / CHF: the pair - at the levels of support_21/10/2015

Trading recommendations

Sell ​​Stop 0.9540. Stop-Loss 0.9620. Take-Profit 0.9510, 0.9460, 0.9410.

Buy Stop 0.9620. Stop-Loss 0.9570. Take-Profit 0.9675, 0.9700, 0.9740, 0.9790


Overview and Dynamics

According to the presented yesterday the Swiss Customs Administration data, the foreign trade balance improved in September compared with August. The volume of Swiss exports, imports rose in September compared to August, but decreased in real terms compared with the same period last year. For example, exports from the country decreased by 2.9% to 16.95 billion francs, imports decreased by 1.5% compared with the same period last year, amounting to 13.903 billion francs.

High franc put pressure on the demand from the euro zone and China, where the main flow is directed Swiss exports. A reduction in supply hours by 7.9% in September, largely caused the decline in exports.

However, the pair USD / CHF remains under pressure since the beginning of the month, which is largely determined by the currently deteriorating relationship of market participants to the US dollar.

The uncertainty of some members of the Board of the need for the Fed to increase interest rates in the US in October, as well as the latest data on the state of the labor market in the country, showed a slowdown in job creation and a weak rise in inflation, which remains well below the target level of 2.0%, lower expectations financial market participants regarding the imminent interest rate increase in the United States. This, in turn, creates the preconditions to build up short positions against the US dollar.

Frank also has the support of the financial markets as safe haven.

 On the other hand, the tendency to reduce the trade surplus in Switzerland on an annual basis, retail sales and producer prices, showing thus a slowdown in inflation could push the National Bank of Switzerland to further easing of monetary policy in the country and conduct interventions with sales franc to weaken the Swiss franc, which, according to the bank significantly overvalued.

The next meeting of the Swiss National Bank on monetary policy in the country is scheduled for December 10, so the focus of market participants in relation to pair USD / CHF will focus on the ECB meeting on 22 October and the Fed on 28 October.


Technical Analysis

In October the pair USD / CHF has dropped 200 points, completely blocking the growth of the past two months. The pair broke the important support levels are 0.9580 (EMA144 on the daily chart), 0.9550 (EMA200). It also passes the upper line of the descending channel on 4-hour chart.

A further reduction would send the pair to 0.9460 levels (lower limit of the downward channel on the daily chart and weekly chart EMA200) and 0.9400 (EMA144 on the weekly chart).

Reduced to the lows of August is possible on the background of the fundamental factors (the Fed does not raise interest rates in the United States October 28).

Securing the pair above the 0.9600 level will create prerequisites for the growth to the levels of 0.9800, 0.9900 (highs of August).