EUR/CHF may have printed a fresh lower high at 1.2133. While under hourly trend-line resistance off 1.2238 scope is seen for a further push under 1.2063. Should this scenario take place a re-test of 1.2000 would then become favoured and the expectation of stops under 1.2000 being triggered. However, a failure to remain under 1.2150 will weaken the bearish case.

In the meantime, it is preferred to trade in line with the longer-term timeframe, which suggests that the down-trend is not over, as displayed by the failure to break over the 50 week moving average.

The combination of falling GDP growth and higher interest payments in Italy represents a much longer-term concern and is unlikely to be solved by short-term policy changes. The bias thus still remains for a return to 7.500% in Italian 10 year sovereign yields, with scope thereafter for yet higher rates.

Also noted, are the negative rates available on short dated German government bonds, warning of continued stresses within the European banking system.

Daily Technical Report