EUR/CHF has been closely correlated with the France CAC and Germany DAX, showing a strong positive relationship. This correlation has been maintained even in the face of economic challenges posed by sluggish consumer demand in China. The 60-period rolling correlation coefficients between EUR/CHF and the two European indices have remained high, indicating a synchronized movement in the market.
China’s core inflation and producer prices for August have reflected a trend of lackluster internal demand. This trend could potentially have a negative impact on the profits of key European manufacturers of luxury goods, cars, and machinery. The recent data release showing a decline in China’s core consumer inflation rate and factory gate prices raises concerns about the future performance of European equities, particularly the France CAC and Germany DAX.
The EUR/CHF has been resilient amidst global market volatility but faces key levels of support and resistance. The currency pair bounced off the 0.9255 level during a recent risk-off episode, but its upward momentum was limited by the 200-day moving average at around 0.9580. The weekly MACD trend indicator has also signaled a potential downtrend, adding to the bearish sentiment surrounding EUR/CHF.
If the EUR/CHF fails to break above the 0.9780 resistance level, it could see further downside towards the next medium-term support levels at 0.9085 and 0.8890. However, a successful breach of the 0.9780 level could shift the sentiment towards a bullish outlook, with a possible target at the long-term pivotal resistance zone of 1.0040/1.1000.
The interplay between China’s economic indicators, European stock indices, and the EUR/CHF creates a complex market environment. While the correlation between EUR/CHF and European equities remains strong, the factors at play in China’s economy present challenges that could impact the profitability of European companies. Traders and investors in the EUR/CHF need to closely monitor key levels of support and resistance, as well as broader economic trends, to make informed decisions in a rapidly changing market landscape.
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