EURCHF has been falling since it tested the 1.20 level in 2018, dropping as much as 0.94. From there, the price rose above 1 in January, but since then, there has been a perfect downtrend. Both the ECB and SNB raised rates, and both economies now have a positive real rate. As the rate-hiking cycle comes to an end, market expectations are turning positive once more. Eurozone consumer confidence, as well as the ZEW expectations index, is on the rise again. Today, Eurozone PMI numbers recovered more than expected, despite showing a fast fall in activity. On the Swiss side, money supply is falling as tight policy is extended. As changes are closing in at the end of hiking cycle, EURCHF is probably about to decide which way to go in the next two months.
(EURCHF Daily Chart)
EURCHF has been in a downtrend channel throughout 2023. The upper line of the channel has been tested more than five times all year long. With the Euro recovering and consumer expectations, the trend has been tested two times already in November. The 200-day moving average is supporting the trendline from above, and the Fibonacci 38.2% level is near this line as well. Many key technical levels converge in the 0.9675 – 0.9700 zone, meaning that this might become a kill zone for EURCHF bulls. As long as it holds, the downtrend will endure. For the downward moves, the first important target will be the 23.6% level near 0.9575, and 0.9510 below it. If both of them are broken, the lower line of the channel will become the next target for the bears.
Despite the strong resistance, EURCHF has been falling since the 2018 top (1.20), and the continuing long-term downtrend is currently at 1.0345. A breakout might give EURCHF some momentum for 2024 to move towards 1.00 and eventually target the long-term trend at the end.
