The U.S. Dollar is trading higher against the Swiss Franc for the first time in several days as weakness in the Euro is dragging down all higher-yielding currencies. This morning’s weakness in the Euro is being blamed on position squaring ahead of this week’s European Union leaders’ meeting in Brussels. In addition, there are some fresh concerns that the Greek bailout negotiations have stalled.
Traders are also watching the upcoming Italian bond auction. The last auction was well-received but this one is coming after a downgrade by Fitch Ratings. The issues regarding Greece surround the need for a bigger rescue package and the possibility of a direct intervention by the European Union into Greek budget decisions. Weaker global equity markets are also encouraging traders to pare long risky asset positions.
Following last week’s dovish tone by the U.S. Federal Reserve in its monetary policy statement, the U.S. Dollar fell sharply against most major currencies. This likely means that after a short-term set-back, the March Swiss Franc will renew its uptrend.
Technically speaking, the March Swiss Franc turned its main trend up on the daily chart following a trade through the former swing top at 1.0762 on January 23. On Friday, the strong rally stalled at 1.0979. This means the rally fell short of a resistance cluster of Gann angles and retracement levels at 1.0991 to 1.1070. Based on the main range of 1.1700 to 1.0431, a key retracement zone was created between 1.1066 and 1.1215. Downtrending Gann angle resistance is at 1.1070 while an uptrending Gann angle arrives at 1.0991.
Now that a short-term range has been formed between 1.0431 – 1.0979, traders should anticipate a possible retracement into 50 to 61.8 percent of this range to 1.0705 – 1.0640. In addition, uptrending Gann angle support can be found at 1.0711 today, making 1.0711 to 1.0705 an important support cluster.
With the main trend up and the market set-up for a near-term retracement, traders should look for a fresh buying opportunity if the currency corrects into 1.0705 to 1.0640 as expected.
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