USDCHF Weekly Forex Forecast – 24th to 28th Dec 2018
Fundamentals Outlook
The week ahead is expected to be quiet as the holiday season kicks in. This marks periods of low volatility and liquidity leading to erratic price movements in the currency pairs. Therefore, it is best to stay on the sidelines until the liquidity picks up. The economic calendar for the week ahead will see mostly second tier data coming out. This could potentially be the catalyst for erratic price action. The week starts off with the Bank of Japan’s core inflation data coming out on Wednesday. The BoJ’s core CPI is forecast to rise 0.6% marking the same pace of increase as the month before.
The BoJ Governor Kuroda is also due to speak later on Thursday which could keep the yen a bit volatile. Retail sales and preliminary industrial production figures mark the economic data from Japan for the rest of the week. The euro markets are closed on Monday and Tuesday. Economic data over the week will see the preliminary inflation data from Germany. Economists polled forecast that German inflation increased 0.3% during December. However, given the recent drop in fuel prices there is a big chance that inflation could miss estimates. Data from the U.S. is relatively quiet with only second tier information such as the Chicago PMI and the Conference Board’s consumer confidence index report coming out over the week.
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Chart set up: The USDCHF currency pair was seen testing the lower support at 0.9870. The decline to this level has formed a double bottom pattern. This could potentially indicate an upside breakout if the double bottom pattern is validated. The short term high near 0.9989 is the key followed by the resistance level at 1.0000.
Key support/resistance levels:
Support: 0.9970; Resistance: 1.0001
Commentary:
If the double bottom pattern in USDCHF is validated, then we can expect to see new highs being formed. However, this is subject to the double top pattern being validated and especially the resistance level at 1.0000 being breached. Considering that this level marks parity for USDCHF, we could expect some stiff resistance at this area. But a successful breakout will no doubt push the USDCHF higher. To the downside, expect price action to maintain a sideways range if the resistance fails to hold the gains. For the week ahead, USDCHF is expected to be flat.
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