Swiss Franc Remains a Dominant Currency, Australian Dollar Stays Weak

Swiss Franc and Yen, on the other hand, finished as the strongest currencies. Although the Fed minutes began to brace the markets for a debate on tapering in the coming months, the dollar received little support. It has indeed finished the prior week as one of the worst performers, alongside the New Zealand and Australian Dollars.

May will be wrapped up this week with end-of-month results, including April’s US new home sales and pending home sales. In addition, the Ifo Business Climate and the GfK Consumer Confidence (for JUNE!) will be published, and the RBNZ will meet for their Interest Rate Decision Meeting. In addition, New Zealand will release Q1 Retail Sales results, and the RBNZ will meet for their Interest Rate Decision Meeting (recall that the New Zealand government was very concerned about the increased housing speculation).

Although the trend in currency markets may indicate risk aversion, it is not evident in other markets. The major global stock indices in the United States, Europe, and Asia all finished nearly flat. The price of gold increased slightly, while the price of oil fell slightly. Overall, the Swiss Franc strength is not strong enough, whereas the Australian dollar is not fully weak. The dollar may continue to fall in the short term, but strong support is not far away. Overall, the pathways are a little mingled.

Despite Settling Higher, Swiss Franc Still Not Explicitly Bullish

Amidst increasing to 1.1026 last week, the steep decline in EUR/CHF suggests that the choppy decline from 1.1149 is about to continue. To prove that the fall from 1.1149 is more than a correction, it must decisively take out 1.0915 main cluster support (38.2 percent retracement 1.0505 to 1.1149 at 1.0903) as well as the channel support. Rebounding from there, followed by a break of the 1.1026 resistance, would keep medium-term bullish expectations for another high above 1.1149 alive.

Notwithstanding, a continuous breach of 1.0903/15, and also the channel support, would signal a move to the downside. Perhaps critically, it would mark the end of the entire rise from 1.0505, ushering in a deeper decline to the next cluster support zone at 1.0737. (61.8 percent retracement at 1.0751).

Nevertheless, if the EUR/CHF falls further, the GBP/CHF could be dragged through the 1.2579 support level. So in this scenario, the decline from 1.3070 may continue to the main resistance level of 1.2259, which has now switched into support.