The recent movement of the EUR/CHF pair has been met with volatility and uncertainty, particularly in light of the ongoing weakness of the France CAC 40. This has led to a negative feedback loop affecting the EUR/CHF pair, with key resistance levels coming into play.
The recovery of EUR/CHF from losses incurred in June has been significant, with a rally of 295 pips or 3.10% from the low on 19 June to a high of 0.9774 on 15 July. This recovery was triggered by political uncertainties surrounding the French legislative elections and the lack of a majority foothold for any party.
When analyzing the performance of the French CAC 40 against other major stock indices such as the German DAX, UK FTSE 100, US S&P 500, and US Nasdaq 100, the CAC 40 has underperformed with a loss of -5% compared to gains in other indices. This underperformance has had a cascading effect on the EUR/CHF pair, leading to increased correlation coefficients.
The recent rally of EUR/CHF has hit a roadblock at the key resistance area of 0.9780, which aligns with the Fibonacci retracement levels and previous support channels. The MACD trend indicator and RSI momentum indicator both signal bearish momentum conditions, indicating a potential downside for the pair. Failure to break above the key resistance could lead to further weakness towards intermediate support levels.
The EUR/CHF pair is facing challenges amidst political uncertainties and market volatility. The negative feedback loop triggered by the weakness of the France CAC 40 has put downward pressure on the pair, with key resistance levels hindering further upside potential. Traders and investors should closely monitor the 0.9780 resistance level for potential breakout or reversal cues in the coming days.