The EURCHF continues to be caught between a rock and a hard place.

I don’t think the SNB is excited about abandoning the ceiling on the CHF at 1.2000. CPI will be released next week and it is expected to show -0.1% for the MoM and YoY. Producer and Import Prices from the most recent data showed the YoY prices are down -1.4%.

Does the SNB really want to see a much stronger CHF? I don’t think so. As a a result, expect the downside to be relatively limited.

Of course the inertia of the CHF being a “safe haven” in times of trouble and the EU still in trouble (with an occasional US blip – reference the stock market swoon and Ebola scare), has helped to keep the EURCHF from rallying much too.

EURCHF on the daily chart shows sellers on rallies toward the 100 day MA.

EURCHF on the daily chart shows sellers on rallies toward the 100 day MA.

Sure there may be an occasional rush higher, like was seen at the beginning of October. However that move was quickly reversed when sellers leaned against the 100 day MA (blue line in the chart above) and pushed it right back down to the more comfortable 1.2050-80 region.

At some point down the road there may come a time when the 100 day MA and the price starts to converge at lower levels. However, there still is a safe distance that should solicit selling against the MA on any rallies toward it (it is currently at 1.2111)

Would a rally in the EURUSD help? It depends on why the EURUSD rallied. When the EURUSD was trading at 1.2881 on October 15 it was helped by a US stock market that was getting creamed. However, on that date, the EURCHF was down at 1.2060 area because the USDCHF was getting creamed too. The CHF cannot help but get caught in the negative global crossfires which limits the upside potential – even when the EURUSD benefits.

At this point, it would likely take some definitive Euro-area growth/inflation to turn the beat around for the pair. That does not seem to be coming soon. Be aware.

From a technical perspective, the 100 day MA will remain a key level that should attract sellers (see chart above). Looking at the hourly chart below, the consolidation has the 100 hour MA (blue line at 1.2058) and the 200 hour MA (at 1.2061) closer to the price. Today, there was a brief move above the 200 hour MA (green line) but that was rejected. The 100 hour MA then became a level to sell against, 3 pips lower.

Needless to say, the levels are getting more and more confined. Can the price go lower still? Yes but with a limit. Can the price go higher? Yes but that might be with a limit too. Get used to it though. It is hard to see a big change any time soon.

The EURCHF hourly chart is showing sellers at the 200 and now 100 MAs

The EURCHF hourly chart is showing sellers at the 200 and now 100 MAs