Fundamental Outlook for EUR/USD and USD/CHF

ForexNewsNow | Published on January 6, 2011 at 8:42 pm

NEW YORK (Forex News Now)Currency market trading in both EUR/USD and USD/CHF has been somewhat erratic over the past year.

As a result, the Euro ended the year lower against the U.S. Dollar, while the Swiss Franc posted a record high of 0.9297 versus the Greenback at year end.

Outlook for the U.S. Economy

Recent economic data also suggests that the United States economy may be ready to firm somewhat, with Wednesday’s ADP Non-Farm Employment Change number showing the highest historical reading since first being released in 2006.

Despite the prospect of more U.S. Dollars coming into the market due to the massive stimulus measures planned by the Fed in its recent QE II package, combined with the threat of QEIII if the current measures do not suffice to get the U.S. economy rolling again, the Greenback has been consistently resilient.

Fundamental Outlook for EUR/USD

The ongoing Eurozone financial troubles continue to weigh heavily on the value of the beleaguered Euro, and the U.S. Dollar has been picking up steam against the Euro despite prolonged recessionary economic conditions in the United States.

EUR/USD therefore seems a better long and intermediate term sell than a buy, despite relatively tough U.S. economic conditions. Essentially, the Euro may not survive in its present form, and so any post-Euro arrangement will most likely favor the Greenback.

As of this writing, the U.S. Dollar was up significantly on the day against the Euro at 1.2993, with EURUSD analysis showing the rate has fallen back under its 200-day MA at 1.3177 and psychological support for EUR/USD at the 1.3000 level.

Fundamental Outlook for USD/CHF

On the other hand, the Swiss Franc’s performance contrasts considerably with the Euro, perhaps because of Switzerland’s historical safe haven status. Furthermore, after having just released its CPI number for December that showed a higher than expected flat reading, Switzerland now has several important economic numbers on the horizon.

The upcoming Swiss data includes PPI that is scheduled for release on Monday, Jan 10th and which fell by -0.2% the previous month. Thursday, Jan 20th will then see the results of the Swiss ZEW Economic Expectations survey. The 24th has the UBS Consumption Indicator scheduled, the 27th has the KOF Economic Barometer due out, and the SECO Consumer Climate survey comes out on the 31st.

In terms of intraday analysis, the Greenback is virtually unchanged against the Swiss Franc today, with USD/CHF now trading at 0.9657 versus yesterday’s 0.9656 close.

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