The EURCHF cross is one of the most-watched crosses in the FX world. Despite the fact that is not so volatile, it reflects the differences between the SNB and ECB policies, but also the trade flows between the two regions.
Lately, the EURCHF broke a major bearish trendline. Coming down from 1.20 in May 2018, it was broken a couple of months ago on a EURCHF bounce from the lows.
The market participants recently found out that the SNB FX interventions so far into 2020 exceed the ones in 2015 when it was forced to give up on the EURCHF 1.20 exchange rate floor. As such, the bounce from the lows could easily be attributed to the SNB, as well as to the strong EUR performance during the summer.
The PPI or the Producer Price Index in Switzerland rose by 0.1% in September. Raw milk and fresh vegetables become more expensive, while petroleum and natural gas saw a fall in price.
The PPI is closely watched in an economy for the simple reason that inflation first appears on the producer side and then is passed on to the consumer. Hence, central banks keep an eye on PPI evolution to form an educated guess about what will happen on the CPI front.
The EURCHF met strong resistance given by previous horizontal support. From an Elliott Wave point of view, an impulsive wave emerged. We can count the initial test of the trendline as the first wave of a possible impulsive move.
In any impulsive wave, the price cannot move beyond the start of it. Hence, the second wave In this bullish five-wave structure cannot fall below the recent low.
However, the recent move lower is not enough for the c-wave to be completed. Hence, bears will likely keep pushing for 1.0650 or 1.06 before booking profits and reverse on the long side.
