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Bullish Momentum May Continue Following Breakout
Economic
Central Bank
Summary:
A successful retest of the broken trendline from above could act as a launchpad for renewed bullish momentum toward the next resistance zone.
Buy
CLOSEDEURCHF
End Time
0.93650
Entry Price
0.94900
TP
0.92900
SL
0.93409 +0.00009 +0.01%
459
Points
Loss
0.92900
SL
0.93191
CLOSING
0.93650
Entry Price
0.94900
TP
Several European Central Bank (ECB) officials stated on Tuesday that the institution's strategic review will largely validate its past policy decisions, including quantitative easing (QE), despite ongoing criticism from some policymakers. The officials also emphasized that the ECB will retain its commitment to "decisive action" during periods of low inflation and interest rates following the review.
Gabriel Makhlouf, a member of the ECB Governing Council and Governor of the Central Bank of Ireland, highlighted that rising uncertainty is weighing on investment across the euro area. He noted that recent soft data point to a significant cooling in both business and consumer sentiment, suggesting growing fragility in the region’s economic outlook.
However, brighter news came from Germany’s ZEW Economic Sentiment Index, which surged to 25.2 in May from -14 in April—well above the market consensus of 11.9. Likewise, the Eurozone ZEW Index jumped to 11.6 from -18.5, indicating renewed optimism among financial market experts despite persistent macroeconomic headwinds.
On the trade front, the European Union and Canada remain the only major economies that have not reported any meaningful progress in trade talks with the United States since President Donald Trump’s announcement of reciprocal tariffs. In a proactive move, the EU has prepared a set of retaliatory measures should the negotiations end without a satisfactory outcome. On Thursday, the European Commission released a public consultation paper detailing potential countermeasures on up to €95 billion worth of U.S. imports—an escalation that could reignite trade tensions between the two economies.
Meanwhile, easing trade concerns globally has triggered a shift toward riskier assets, which has weighed on traditional safe havens such as the Swiss franc (CHF). At the same time, Swiss 10-year government bond yields rose toward 0.37%, tracking the global increase in borrowing costs as investor risk appetite improved.
However, gains in Swiss yields remain capped by growing expectations of further monetary easing from the Swiss National Bank (SNB). Last week, SNB Chairman Thomas Schlegel reaffirmed the central bank’s readiness to intervene in currency markets and implement deeper rate cuts, possibly pushing rates further into negative territory if inflation remains subdued below the bank’s target.
Technical Analysis
The EUR/CHF pair has broken out to the upside from an ascending triangle formation, rallying from the support of the 100- and 200-period moving averages at 0.9362 and 0.9372. The pair closed decisively above both moving averages, which could indicate the beginning of a sustained bullish phase. If this breakout is followed by a solid bullish crossover of the moving averages, momentum could carry the pair toward the next key resistance near the 0.9500 level.
That said, if price pulls back and breaks below the ascending trendline, the bullish setup could be invalidated, opening the door for deeper losses. Currently, the RSI stands at 57, indicating that the pair is not in overbought territory, leaving room for further upside. A successful retest of the broken trendline from above could act as a launchpad for renewed bullish momentum toward the next resistance zone.
Trading Recommendations
Trading direction: Buy
Entry price: 0.9365
Target price: 0.9490
Stop loss: 0.9290
Validity: May 23, 2025 15:00:00
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