EUR/CHF: the euro at its lowest of the year against the franc before the ECB

The ECB could increase selling pressure on EUR/CHF in the short term while waiting for an improvement in the outlook.

Darkening outlook in Europe puts pressure on EUR/CHF

The price of EUR/CHF has fallen in recent months to test its lowest of the year at around 0.93. In Europe, political uncertainty and the darkening economic outlook weigh on the single currency and tend to benefit the Swiss franc thanks to its refuge aspect.

In the absence of any improvement in fundamentals in Europe, downward pressure should remain dominant on the single currency. Especially since the European Central Bank (ECB) could not only act in a “dovish” manner on Thursday by lowering its rates again by 25 basis points, but also communicate in a “dovish” manner given the clear slowdown in inflation and underlying inflation since the previous meeting.

Nevertheless, many catalysts could justify a rebound in the coming weeks, starting with an improvement in the political situation in France and Germany. In France, Macron’s announcement could appoint a prime minister who would help form a majority in parliament, while in Germany, the pro-European, center-right CDU/CSU alliance could win federal elections in February.

The first hundred days of the new mandate of the European Commission (which began on December 1) could also be full of positive announcements for the European Union, including deregulation or even a union of capital markets to revive growth. .

A reacceleration of the global economy thanks to numerous rate cuts by central banks around the world could also justify a renewed interest in the single currency.

EUR/CHF daily price chart – key levels

Technical analysis of the EUR/CHF price

EUR/CHF consolidates on major support at 0.93-0.92

From a technical analysis perspective, EUR/CHF returns to test a major support zone at around 0.93-0.92. The increasingly low highs since the start of summer suggest increasing selling pressure and therefore bode poorly for the hypothesis of a major rebound in EUR/CHF.

A fall below the support zone therefore seems most likely. If so, the symbolic threshold at 0.90 will be the next major support to watch.

The underlying outlook for EUR/CHF would begin to improve in the event of a rebound above the bearish slant through the major highs since August.