Today’s Potential New Breakout Signals
With the reversal in price action for most USD pairs late yesterday, we have no new breakout signals of note as this was one of the chief sources of recent breakouts. We do highlight below the potential for a EURCHF breakout to the upside that is possible on another stronger close higher today. In other developments, with the USD reversal and a sharp weakening in the CHF yesterday, USDCHF has very suddenly switched gears and deserves watching in the days ahead.
Chart highlight: EURCHF
EURCHF has ripped higher since yesterday with no real development of note behind the move – in fact, arguably the very low Euro Zone CPI reading suggests that traders will be looking forward to more forceful easing from the ECB and the ECB’s Lane even mentioned that the EURUSD rally is important as EURUSD teased 1.2000 – both of which are euro negative. On the other hand, and perhaps more importantly in the longer run – deflationary risks could trigger more generous EU fiscal stimulus which is usually more FX positive. In any case – the notable area on the EURCHF chart is the 1.0825-1.0850 area series of highs that turned back the action on every prior occasion, and quickly so. So far today, this pattern appears to be repeating – so the price action needs to stick above 1.0835 into today’s close to register a proper break.