CHF/JPY forecast for November 18, 2020
Looking at the chart, we will notice that since the end of August, the Japanese yen has taken the lead as the safest currency for investors.
After that, on the chart, we see that every next high is a lower high, and when we connect them, we get a trend line that connects them and makes a line of resistance.
Currently, the CHF/JPY pair is on annual support at 114,000 and Fibonacci support at level 38.2%.
The intersection of the MA 50 and MA 100 gives us a signal that this pair may descend even lower potential than the lower trend line to make it higher low to 112,000.
The Swiss franc’s weakness can be linked to the increase in new infections throughout Europe, and thus in Switzerland. The lockdown of European countries also affects the Swiss economy, which leads to an increase in unemployment, and thus a decrease in consumption and a decrease in Swiss franc flows.
Next week, the CHF has an important economic report (ZEW) Economic Expectations Index rates the relative six-month economic outlook for Switzerland, which will show us how direction the economy is moving. Japan jumped strongly in the third quarter after bad news in the second quarter, which was affected by the coronavirus pandemic.
Its first preliminary estimate of GDP for the third quarter of 2020 recorded a significant recovery in economic activity with 5% quarterly growth. Private consumption and external demand led to a recovery in GDP, but weaknesses in the consumption business continued, and declining inventories hampered the overall recovery.
A renewed increase in COVID-19s has slowed expectations for a sustainable economic recovery in Japan; also, weaknesses in manufacturing and service PMIs and a turnaround in household consumption recovery are additional difficulties for the Japanese economy. The key risks remain focused on the development of the COVID-19 event.
The negative risk is the re-introduction of some restrictive measures to combat COVID-19; the positive risk is the rapid implementation of the vaccine to reduce the Covid-19 pandemic.
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