As financial markets have calmed down over the past few sessions amid hopes for more central bank stimulus across the globe, the Euro has started to stabilize at strong support levels. Economic data this morning will feature German PPI which is anticipated to show the absence of inflationary pressures as well Eurozone Construction Output which is likely to show further economic stress. The ECB is planning what type of stimulus to apply to the economy and when, but forex traders have already priced in a dovish ECB. Will the EURCHF rally off of support levels as the Swiss National Bank will join the interest-rate cut chorus soon? Get your trading set-up now at PaxForex Daily Fundamental Analysis and join our fast growing community of profitable forex traders.
Economists expected the Swiss trade balance for July to print a surplus, but smaller as compared to June’s surprise increase which was the strongest in two-and-a-half years. Despite the slowing global economy, the US-China trade war and Switzerland’s own dispute with the slowing Eurozone, the Swiss economy has outperformed the continent. This added to the capital inflow into the Swiss Franc, one of the forex market’s safe have currencies, and prompted speculation that the Swiss National Bank may cut interest rates in order to limit the negative impacts of a strong Swiss Franc on its export oriented economy. How will this impact the EURCHF? Today’s fundamental analysis will take a look if price action has more room to the downside and what the upside potential is.
Here are the key factors to keep in mind today for Euro trades:
- German PPI: The German PPI for July is predicted flat at 0.0% monthly and to increase by 1.0% annualized. Forex traders can compare this to the German PPI for June which decreased by 0.4% monthly and which increased by 1.2% annualized.
- Eurozone Construction Output: Eurozone Construction Output for June is predicted to decrease by 0.1% monthly and to increase by 2.2% annualized. Forex traders can compare this to Eurozone Construction Output for May which decreased by 0.3% monthly and which increased by 2.6% annualized.
Here is the key factor to keep in mind today for Swiss Franc trades:
- Swiss Trade Balance: The Swiss Trade Balance for July is predicted at CHF3.870B. Forex traders can compare this to the Swiss Trade Balance for June which was reported at CHF4.096B.
Should price action for the EURCHF remain inside the or breakout above the 1.0835 to 1.0900 zone the following trade set-up is recommended:
- Timeframe: D1
- Recommendation: Long Position
- Entry Level: Long Position @ 1.0875
- Take Profit Zone: 1.1055 – 1.1120
- Stop Loss Level: 1.0800
Should price action for the EURCHF breakdown below 1.0835 the following trade set-up is recommended:
- Timeframe: D1
- Recommendation: Short Position
- Entry Level: Short Position @ 1.0790
- Take Profit Zone: 1.0670 – 1.0720
- Stop Loss Level: 1.0835
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