The Swiss remains in a down draft posture but fundamentals would seem to remain in the bear’s camp. However, suggestions from the SNB that they are running out of patience with respect to the Swiss exchange rate might prompt more selling attacks of the Swiss in the short term as the market attempts to pull out intervention. In fact, the SNB suggested that defending the Swiss at 1.20 to the Euro was “crucial” to defending against an entrenched pattern of deflation ahead. The trend is down in the Swiss and more new lows are expected but the risk to fresh shorts is rising and the Swiss bears have already priced in a large measure of negative fundamental expectations.
Technical Outlook: The market was pushed to a new contract low. Momentum studies are still bearish but are now at oversold levels and will tend to support reversal action if it occurs. The market’s close below the 9-day moving average is an indication the short-term trend remains negative. The swing indicator gave a moderately negative reading with the close below the 1st support number. The next downside target is 98.69. With a reading under 20, the 9-day RSI indicates the market is extremely oversold. The next area of resistance is around 99.82 and 100.17, while 1st support hits today at 99.08 and below there at 98.69.