EURCHF stirring and reversing
In recent months we have published a handful of notes and videos on the Euro currency, against the U.S. dollar and on some cross rates, such as EURCAD and EURAUD. In all, we have been advocates of Euro strength. While the jury is still out on EURCAD and EURAUD, this week the EURUSD launched a rebound from its 20 year, long term trendline support and specifically from the 1.0770/60 region, that halted declines in April and February of this year.
Share this:
In recent months we have published a handful of notes and videos on the Euro currency, against the U.S. dollar and on some cross rates, such as EURCAD and EURAUD. In all, we have been advocates of Euro strength.
While the jury is still out on EURCAD and EURAUD, this week the EURUSD launched a rebound from its 20 year, long term trendline support and specifically from the 1.0770/60 region, that halted declines in April and February of this year.
One of the key catalysts behind this week’s EURUSD’s rally was a joint press conference where German Chancellor Angela Merkel and French President Emmanuel Macron proposed a €500bn Recovery fund to support the regions worst hit by COVID-19.
The proposal outlines that funds raised via the market will be distributed to member states via grants. The member states would not be required to repay the grants. Instead, the grants would be repaid via revenues of the EU budget.
This has been met with opposition from member states including Austria, Denmark, the Netherlands, and Switzerland who prefer loans as opposed to grants. However, at the core, the proposal is viewed as a first step towards fiscal union - the lack of which has been a key problem weighing on the Euro since inception.
In terms of how FX markets might respond should the Franco-German proposal gain traction, moves this week in EURUSD and EURCHF provide an insight.
As can be viewed on the chart below EURCHF has been well supported ahead of 1.0500 in recent months and there are signs of bullish divergence via the RSI indicator. Additionally, the rally on Monday above the April 1.0612 high, ends the recent pattern of lower highs and lower lows and is a preliminary sign that a recovery is underway.
Further confirmation would be a break and close above resistance 1.0655/70 area that would then allow a stronger recovery towards the highs of late 2019, 1.1035/55 area. Keeping in mind, if EURCHF was to break/close below the 1.0500 support zone, it would be negate the prospects for a recovery.
Source Tradingview. The figures stated areas of the 20th of May 2020. Past performance is not a reliable indicator of future performance. This report does not contain and is not to be taken as containing any financial product advice or financial product recommendation
Latest market news
Open an account in minutes
Experience award-winning platforms with fast and secure execution, and enjoy tight spreads from 0.5 pts on FX and 0.3 pts on indices.
Economic calendar
Web Trader platform
Our sophisticated web-based platform is packed with features.
Related articles
Australian Dollar Technical Outlook: AUD/USD Breakdown Threatens Deeper Correction 9 23 2026
AUD/USD remains under pressure after breaking key trend support, with the latest decline putting the focus on the next major downside pivot.
USD/JPY forecast: US dollar strengths amid hawkish Fed despite recent oil weakness
The US dollar has extended its gains this morning, even if oil prices finished lower for the fifth consecutive day yesterday. Oil prices have bounced back in this first half of today’s session, causing a bit of pressure on currencies that rely on energy imports such as the euro, pound, Swiss franc, and Japanese yen. But it was the dollar that was exerting the most pressure, amid hawkish FedSpeak. Meanwhile, European indices and precious metals were also under a bit of pressure amid the strength of the dollar.
USD/JPY and USD/CHF Could Diverge as CHF/JPY Approaches Resistance
USD/JPY and USD/CHF retain bullish structures, but CHF/JPY resistance could expose a divergence between the two US dollar pairs.
This report is intended for general circulation only. It should not be construed as a recommendation, or an offer (or solicitation of an offer) to buy or sell any financial products. The information provided does not take into account your specific investment objectives, financial situation or particular needs. Before you act on any recommendation that may be contained in this report, independent advice ought to be sought from a financial adviser regarding the suitability of the investment product, taking into account your specific investment objectives, financial situation or particular needs.
StoneX Financial Pte. Ltd., may distribute reports produced by its respective foreign entities or affiliates within the StoneX group of companies or third parties pursuant to an arrangement under Regulation 32C of the Financial Advisers Regulations. Where the report is distributed to a person in Singapore who is not an accredited investor, expert investor or an institutional investor (as defined in the Securities Futures Act), StoneX Financial Pte. Ltd. accepts legal responsibility to such persons for the contents of the report only to the extent required by law. Singapore recipients should contact StoneX Financial Pte. Ltd. at 6826 9988 for matters arising from, or in connection with the report.
In the case of all other recipients of this report, to the extent permitted by applicable laws and regulations neither StoneX Financial Pte. Ltd. nor its associated companies will be responsible or liable for any loss or damage incurred arising out of, or in connection with, any use of the information contained in this report and all such liability is hereby expressly disclaimed. No representation or warranty is made, express or implied, that the content of this report is complete or accurate.
StoneX Financial Pte. Ltd. is not under any obligation to update this report.
Trading CFDs carries a high level of risk that may not be suitable for some investors. Consider your investment objectives, level of experience, financial resources, risk appetite and other relevant circumstances carefully. The possibility exists that you could lose some or all of your investments, including your initial deposits. If in doubt, please seek independent expert advice. Visit www.forex.com/en-sg/terms-and-policies for the complete Risk Disclosure Statement.