EUR & CHF Weekly Forecast – ECB Rhetoric in Focus

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There’s not much in the way of major reports from the region, but a fresh set of political troubles in Italy might keep things interesting.

A couple of speeches by ECB head Lagarde and the central bank meeting minutes are also worth keeping tabs on.

There are no top-tier catalysts lined up from the Swiss economy, though.

Here’s what you should watch out for:

ECB Chairperson Lagarde’s speeches

Scheduled to moderate an online panel discussion at the One Panel Summit on Jan. 11, 3:40 pm GMT
Due to give a speech at the Reuters Next online event on Jan. 13, 10:00 am GMT
Optimistic remarks on the region’s fight against the pandemic and an upbeat outlook for ECB action could be enough to lift the shared currency

Detailed record of the central bank’s latest policy meeting, which includes insights on the economic conditions that influenced their decision on monetary policy
In their December rate statement, the ECB sounded positive about the vaccine rollout and the slight rebound in Q3 economic performance
However, the resurgence of the virus in the last few months of 2020 led the Governing Council and staff to conclude that the near-term repercussions of the pandemic on growth and inflation has been more pronounced
Dovish remarks suggesting further bond purchases or potential rate cuts might undermine euro strength

Italy is once again stealing the show with its political crisis, as Prime Minister Giuseppe Conte is facing a challenge from former Prime Minister Matteo Renzi
As it turns out, Renzi is throwing shade about the use of the EU stimulus funds and has threatened to withdraw his political party, Italia Viva, from the center-left coalition
If that happens, current PM Conte’s government could face a vote of confidence or collapse

These lower-yielding European currencies tend to benefit from risk-off flows
Updates on the new strain of the COVID-19 virus spreading among European nations could keep gains in check, although more developments on the vaccine rollout appears to be providing some support

Short-term moving averages place majority of euro pairs in bearish territory while the rest are in a weakening bullish trend
In particular, EUR/JPY, EUR/CHF, and EUR/USD might see a reversal from their climb soon

The euro has been most volatile against the Aussie over the past seven days, moving an average of nearly a hundred pips per day

EUR Forex Pairs Volatility from MarketMilk

As for franc pairs, Stochastic suggests that the Swiss currency might be in for gains against the commodity currencies
AUD/CHF, NZD/CHF and CAD/CHF are in the overbought zone while the rest are on neutral grounds

Missed last week’s price action? Check out the EUR & CHF Price Review for Jan. 4 – 8!