Colling Inflation Leaves EURCHF Higher

EURCHF grapples with a persisting decline as the Euro loses ground against the Swiss Franc. Amidst this, Swiss inflation dipped to a two-year low at 1.4% in November, notably below market forecasts and the previous month’s 1.7%. The drop was widespread, with decreases observed across various sectors, including recreation, food, and transport. Additionally, the monthly CPI declined by 0.2%, while the core rate edged down to 1.4%. 

The Euro’s decline against the Franc is marked by three consecutive days of losses, leading to a weekly decline of 1.87% last week, reaching 0.9450. This plunge follows European Central Bank President Lagarde’s suggestion of possible quantitative easing discussions, denting confidence in the Eurozone economy. 

With the Swiss Franc hitting a four-month high and Swiss GDP beating expectations, the currency market braces for potential verbal intervention by the Swiss National Bank. However, the cautious optimism over Swiss inflation may counterbalance the Franc’s strength. 

Technical Analysis: 

The 4-hour chart shows that the EURCHF trades at 0.95034, displaying a bearish sentiment. Despite a slight uptick following Switzerland’s lower-than-expected inflation data, the pair remains below critical SMAs, suggesting a bearish trajectory. The downward-sloping 20-SMA (green line) recently crossed below the 50-SMA (blue line) and 100-SMA (orange line), also acting to support the bearish sentiment. The RSI indicates a potential upward movement, with the indicator sharply higher at 35.34 following the move above the oversold territory. 

Short-term trading opportunities could exist towards the resistance level at the 0.95258 price level should the bulls sustain a push higher. A break above the initial resistance could confirm the bullish momentum, likely bringing the 0.95650 and 0.95968 resistance levels into play. 

However, short-term trading opportunities could arise towards the initial support at 0.94514 should the current impulsive push higher falter. A break below the 0.95414 level would likely leave the 0.94201 support level within the bears’ reach in the short term. 


Given the upcoming ECB President’s speech and Eurozone data releases, the EURCHF may continue its volatility. Short-term trading opportunities could manifest towards 0.95258 if bullish momentum persists, while a bearish turn might target 0.94514. The pair’s fate remains tethered to Eurozone economic indicators and central bank statements. 

Sources: TradingView, Trading Economics, Swiss Federal Statistical Office, Reuters, Dow Jones Newswire, MT Newswire. 

Piece written by Mfanafuthi Mhlongo, Trive Financial Market Analyst 

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