FxWirePro: EUR/CHF recovery capped at daily cloud, weakness to resume on break below 61.8% Fib

Refer EUR/CHF chart on Trading View

• EUR/CHF struggles to extend weakness below 61.8% Fib, edges higher for the 2nd straight session.
   
• However, recovery finds stiff resistance at nearly converged 5-DMA and daily cloud at 1.1524.
   
• Data released on Monday showed German factory orders contracted by 4% m/m in June, below analysts' estimate of -0.4%.
   
• Data suggested that the weakness in production has continued into Q3, weighing on the euro.
   
• Upbeat eurozone Investor Confidence Index which improved to 14.7 in August from 12.1 in July did little to support the single currency.
   
• Technical indicators support weakness in the pair. Stochs are at oversold so caution advised. However we do not see any major reversal.
   
• Focus now on Germany industrial production and trade balance figures. If numbers disappoint, the euro could come under a renewed selling pressure.
   
• Next major bear target lies at 78.6% Fib at 1.1442, while, break above 5-DMA and cloud could see test of 50-DMA at 1.1579.

Support levels - 1.15 (61.8% Fib), 1.1480 (June 21 low), 1.1442 (78.6% Fib)

Resistance levels - 1.1524 (5-DMA), 1.1526 (cloud base), 1.1575 (21-EMA)

Call update: Our previous call (https://www.econotimes.com/FxWirePro-EUR-CHF-rejected-at-session-highs-good-to-go-short-on-break-below-21-EMA-1406247) has hit all targets.

Recommendation: Watch out for decisive break below 61.8% Fib for weakness, target 1.1480/ 1.1445.

FxWirePro Currency Strength Index: FxWirePro's Hourly EUR Spot Index was at -46.8801 (Neutral), while Hourly CHF Spot Index was at 63.3632 (Neutral) at 0545 GMT. For more details on FxWirePro's Currency Strength Index, visit http://www.fxwirepro.com/currencyindex.