EURCHF Tests Key Support After Eurozone Final Services PMI Came Out Lower Than Expected
Last Updated on January 7, 2021
EURCHF Outlook: 6th January 2021
Eurozone – Final Services PMI
On Wednesday, at GMT 9:30 a.m., Markit released Eurozone’s final services purchasing managers’ index (PMI) figure. It measures the level of a diffusion index by surveying around 600 purchasing managers in the country.
Businesses are the first to react to changing economic climates. The Final Services PMI is calculated based on survey questions covering employment, production, price levels, new orders situation. Also, it is based on inventory conditions. Hence, the largest online Forex brokers consider this data to be a leading indicator of the overall economic health of the country.
Last month, the Eurozone’s Final Services PMI reading came out at 47.3. The forecast for this month was set at a reading of 47.4. However, the actual figure came out much worse, at 46.4.
Switzerland – Unemployment Rate
On Thursday, at GMT 6:45 a.m., the Swiss SECO will release the national unemployment rate. It measures the percentage of the total workforce which remained unemployed over the past month.
CFD traders consider the unemployment rate to be one of the most important fundamental indicators of the Swiss economy. It is because one of the main goals of the Central Bank of Switzerland is to keep unemployment as low as possible. Although this is a lagging indicator, analyzing this data can help Forex traders predict future interest rates and inflation situation in the country.
Last month, the unemployment rate in Switzerland came out at 3.4%. This month, analysts are expecting it to remain unchanged at 3.4%.
The EURCHF remained range-bound since the end of May 2020. After it went up by around 400 pips in May, it remained in the range between 1.0500 to 1.0910. Meanwhile, the EUR/CHF seemed to be respecting a pivot zone near the 1.0795 level. Although it was mostly ranging during this time, the EUR/CHF has also formed two distinct uptrend lines in the process.
Yesterday, the EUR/CHF tested the second uptrend line and once again found support near 1.0795. Currently, it is trading just above the support near the 1.0795 level.
The Eurozone Final Services PMI fell more than expected over the last month. On the other hand, analysts are expecting the Swiss unemployment rate to remain constant at 3.4%. We believe it would set a bearish fundamental outlook for the EURCHF this week. Therefore, if the EUR/CHF closes below the support near 1.0795, it would likely attract additional bearish momentum in the market.
Hence, CFD traders should look out for trading opportunities below this major support level around 1.0795.
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