Potential Bullish Breakout From Triangle Formation

Summary:

This area is displaying resistance, and if it breaks out again to the upside, we could witness additional gains targeting the zone around 0.5846.

BUY AUDCHF

Close Time

CLOSED

0.57900

Entry Price

0.58460

0.57700

0.56135 -0.00053 -0.09%

20.0

Pips

Loss

0.57700

0.57698

Exit Price

0.57900

Entry Price

0.58460

Fundamentals

The Swiss National Bank's easing cycle is set to extend into the next year, with economists now forecasting two additional interest rate cuts during the upcoming policy meetings in December and March, according to a recent Bloomberg survey.

These anticipated quarter-point reductions would bring the key interest rate down to 0.5%, as indicated by the latest poll of economists. The previous survey had not predicted any further actions following the SNB's rate cut in September.

Lowering rates aligns with an expected deceleration in Swiss inflation. Consumer price growth moderated to 0.8% in September and is now projected to average 1.2% this year, decreasing to 0.9% next year, and stabilizing at 1% in 2026.

Further reductions in borrowing costs are consistent with recent statements from SNB policymakers, who have suggested additional easing measures, although they emphasize that they are not committing to these actions preemptively. Vice President Antoine Martin remarked on Thursday that current price pressures and production trends indicate a need for a lower policy rate.

Economists surveyed largely maintained their forecasts for Swiss economic growth, expecting output to accelerate to 1.4% this year and next, eventually reaching 1.7% by 2026.

The Swiss central bank has lowered borrowing costs three times in 2024, with inflation remaining within its 0%-2% target range for over a year. Given the SNB's constrained capacity for easing, a sharper-than-expected decline in consumer price growth could compel officials to consider currency interventions, as the strong Swiss franc is diminishing import prices.

In other news, new data reveals that the number of employed Australians surged by 64,100 in September, far exceeding expectations of 25,000 and the downward-revised figure of 42,600 from the previous month. Among these new jobs, the majority—51,600—were full-time positions, while the remaining 12,500 were part-time roles, according to the Australian Bureau of Statistics.

The unemployment rate, which was anticipated to rise to 4.2%, remained steady at 4.1%, the same as in August.

Overall, the data depicts a robust labor market, reducing the likelihood that the Reserve Bank of Australia (RBA) will need to cut interest rates in the coming months. High employment levels are typically associated with increased spending and inflation, which in turn supports the Australian Dollar (AUD) as relatively higher interest rates attract more foreign capital inflows. Potential Bullish Breakout From Triangle Formation_1

Potential Bullish Breakout From Triangle Formation_1

Technical Analysis

The AUD/CHF currency pair appears to be breaking out to the upside from a triangle formation, positioning itself above the 100-period moving average while testing the 200-period moving average. This area is displaying resistance, and if it breaks out again to the upside, we could witness additional gains targeting the zone around 0.5846.

Breakouts from triangle formations often occur following a pullback to the breakout zone, with subsequent movements commencing from there. The difference in potential rates between the RBA, which is adopting a more cautious approach regarding interest rate cuts, contrasts with the SNB's stance, potentially driving a bullish breakout.

Trading Recommendations

Trading direction: Buy

Entry price: 0.5790

Target price: 0.5846

Stop loss: 0.5770

Validity: Oct 29, 2024 15:00:00

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