HomeLive CommentsEUR/CHF pressing key resistance, ECB to expand PEPP

EUR/CHF pressing key resistance, ECB to expand PEPP

ECB monetary policy decision is a major focus for today. After recent rhetorics from the central bank’s officials, markets are generally expecting an expansion of the Pandemic Emergency Asset Purchase (PEPP) to be announced today. Additional, ECB should release new macroeconomic projections that reflect the impact of the coronavirus pandemic.

President Christine Lagarde has already indicated that the “mild scenario” of coronavirus impact is already “out of data”. The development is “it’s very likely that we are somewhere between the medium and severe scenarios”. Thus, GDP projection might be revised down to -8% to -12% for 2020. Inflation forecasts should also be sharply downgraded.

Suggested reading: ECB Preview – Lagarde to Expand PEPP and Sharply Downgrade GDP and Inflation Forecasts.

Euro is somewhat turning softer today as markets prepare for ECB decisions. The rebound in the recent weeks against Dollar, Yen, Swiss Franc, and ti a lesser extend Sterling, has been impressive. The case of a massive bullish reversal in Euro is building up. Yet, we’d prefer to see, at least some more decisive signals from EUR/CHF to confirm.

EUR/CHF is now pressing important resistance cluster between 1.0811 support turned resistance and 55 week EMA (now at 1.0826). Sustained break of this resistance zone should confirm medium term bottoming at 1.0503. Rise from there should at least be correcting the down trend form 1.2004 to 1.0503, with chance of trend reversal. In this case, further rally would be seen to 1.1059 cluster resistance (38.2% retracement of 1.2004 to 1.0503 at 1.1076). However, rejection by the current resistance zone will retain medium term bearishness for another low below 1.0503 down the road.

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