EURO, SWISS FRANC, EUR/CHF, DAX INDEX, STOCK MARKET CRASH – TALKING POINTS
- Euro outlook bearish vs Swiss Franc as EUR/CHF retreats from resistance, resumes downtrend
- DAX erased four years’ worth of gains in less than three weeks as the index traded at 4-year low
- ECB’s Lagarde warned of 2008-style crisis as region faces unprecedented threat of coronavirus
EUR/CHF PRICE CHART
After briefly peaking its head above the descending resistance channel, EUR/CHF quickly resumed its prior downtrend after the pair failed to clear what is technically-significant resistance at 1.0679. For three consecutive days, the pair traded on the cusp of this ceiling, but ultimately capitulated from a lack of confidence in upside potential. The upward-extending wicks indicated a longing to climb higher.
EUR/CHF – Daily Chart
EUR/CHF chart created using TradingView
Looking at a monthly chart shows another alarming trend for EUR/CHF bulls: the pair is less than four percent away from trading at its lowest point since the Swiss National Bank lifted the exchange rate floor in 2015. Traders will be closely eyeing what could be potential support between 1.0235 and 1.0334 where selling pressure may begin to abate. However, the fundamental circumstances support a bearish bias.
EUR/CHF – Monthly Chart
EUR/CHF chart created using TradingView
DAX INDEX OUTLOOK BEARISH
Following the peak in late February, the benchmark German DAX index plunged over 30 percent after briefly stalling around the 2018-low at 10381.510. It subsequently gapped below it and a 2016-floor at 10085.480 and may aim to challenge support at 8703.850, a level not reached since 2014. Given the DAX’s significant caps in an environment of low liquidity, further drops of this magnitude should not be casually brushed aside.
DAX Index – Daily Chart
DAX chart created using TradingView
This is supported by the monthly chart perspective that shows the index has broken below a nine-year uptrend, consequently dealing a decisive blow to the DAX’s outlook – at least in the short term. Recovery from here will be particularly difficult given the region’s deteriorating growth prospects from COVID-19 and the upcoming US Presidential election which may precede a revived EU-US trade war.
DAX Index – Monthly Chart
DAX chart created using TradingView
EURO TRADING RESOURCES
- Tune into Dimitri Zabelin’s webinar outlining geopolitical risks affecting markets in the week ahead !
- New to trading? See our free trading guides here !
- Get more trading resources by DailyFX !
--- Written by Dimitri Zabelin, Jr Currency Analyst for DailyFX.com
To contact Dimitri, use the comments section below or @ZabelinDimitri on Twitter
