EURCHF was flat on the day as the market awaits German inflation figures after news that the country’s debt hit a record high. Analysts expect a reading of -0.1% for inflation and traders will be watching closely due to the recent European Central Bank concerns over the strong Euro.
Sunday saw an ECB member stating that bank were in agreement that a higher Euro was causing deflationary pressures and the bank’s head Christine Lagarde noted that the rates were being watched. A higher number for Germany would remove some of that concern, while a deflationary slant would see a sell-off in the single currency.
Data released today showed that German debt levels had reached a record high. Debt in government, regional states, municipalities, and social security rose to 2.1 trillion euros ($2.46 trillion) in the first half of 2020. The numbers are not largely important to the currency rate but highlight the growing funding problems in economies that are only serviceable with rates near zero.
Tomorrow sees another speech from Lagarde, which will likely not hold any new surprises, followed by a quarterly bulletin from the Swiss National Bank. The EURCHF rate will be interesting in the months ahead because both central banks see their currency as overvalued. The SNB is following a dual policy of currency interventions and negative to temper gains in the Franc but the currency also has safe haven gain potential as the Brexit deadline approaches, so one of the banks will be unhappy in the weeks ahead.
EURCHF Technical Outlook
The EURCHF is flat on the day but the last two days were as the pair treads close to an uptrend line from May. We could see a break lower to test the key support around 1.0725. This could open up a move lower to 1.0600. A close above 1.0850 would be needed for the uptrend to resume. The Investing Cube team is currently available to assist all levels of traders with a Forex Trading Course or one-to-one coaching.