Swiss franc may extend rally vs euro on French budget concerns, technicals suggest
The Swiss franc has rallied sharply against the euro over the past week amid concerns over France's budget and political gridlock. Technical analysis indicates the franc is nearing levels that could put it on a path toward its record high against the euro.
By Robert Fullem NEW YORK, Oct 6 (Reuters) — The Swiss franc has rallied sharply over the last week against the euro as France’s budget concerns spread through Europe’s bond market, and is closing in on levels that could potentially put it on a path toward its record high against the single currency, technical analysis indicates. Click here for a detailed technical analysis chart. The euro has come under growing pressure from concerns over France's high debt and political gridlock as next year's presidential election gets closer.
The exchange rate is usually quoted as the number of francs per euro, so a falling line on the chart means the Swiss currency is getting stronger. Technical analysts use several tools to determine where a currency might be headed, including trendlines, moving averages and earlier highs and lows. A moving average smooths out daily price swings by tracking the average price over a set period, such as 200 days or 200 weeks. This helps show which way a market is really heading.
Before worries about France's finances boiled over last week, the euro had been climbing toward a descending trendline. That line connects a series of lower and lower peaks against the franc. It also sat close to the 200-week moving average, which made the area doubly important. Had it surpassed those markers, it would have indicated a more bullish outlook for the euro.
" It's a sign that momentum has shifted to sellers of the euro. The exchange rate is now nearing two closely watched levels. 9235. 9227, the halfway point of the euro's recent rally against the franc.
Traders pay attention to these halfway points, known as 50% retracements, because markets often pause or reverse there. 8969. 87, That record was set in 2015, when Switzerland shocked markets by announcing it would no longer stop the franc from strengthening. However, if markets worry less about France's budget and the euro recovers, a rise above the downtrend line would make the outlook more positive for the euro.
95 and falling. 95 could brighten the euro's outlook (Mapping the Market is a daily column written journalists. The commentary is based on a technical analysis of financial charts, which helps assess the likelihood of future price moves but does not guarantee the outcome. The column does not constitute investment advice or trading recommendations.
) (Robert Fullem is a Reuters market analyst. The views expressed are his own. com)