Forex Watchlist: Triangle Breakout for EUR/CHF?

The European Central Bank (ECB) will publish its monetary policy decision in a few!

The closely-watched event got me taking a closer look at EUR/CHF and its consolidation on the daily chart.

Think we’ll see a breakout today?

EUR/CHF Daily Forex Chart

EUR/CHF has been making higher lows since March when EUR hit parity against CHF.

The pair is now trading 500 pips higher closer to 1.0500 after breaking higher from its consolidation at 1.0300.

That means it’s make-or-break time for EUR bulls!

As you can see, 1.0500 lines up with a key area of ​​interest. Not only that, but it’s also juuuust above the 200 SMA on the daily chart.

The odds are favoring EUR/CHF bears if you consider the 1.0500 psychological and previous interest levels. Stochastic is also on the bears’ side with an almost overbought signal.

But that’s before you consider the latest candlesticks. They be bullish, yo.

And why not? Word around is that ECB President Lagarde and her team will set the stage for the end of their ultra-loose monetary policies in response to ultra-high inflation and a not-so-bad GDP in Q1 2022.

Markets are pricing at the end of ECB’s Asset Purchasing Program and hints of a 25-basis-point rate hike in July. If EUR bulls are lucky, we could hear details of a multiple rate hike schedule including a 50-bp rate hike in September.

A more hawkish tightening schedule would solidify EUR/CHF’s stay above its 200 SMA and push the pair above the 1.0500 resistance. I’ll be on the lookout for a trip to 1.0700 or 1.0800 depending on the strength of the upswing.

I’m not discounting a buy-the-rumor, sell-the-news situation, though.

If ECB members announce a less aggressive tightening schedule, then EUR/CHF could get rejected at 1.0500 and make its way back to its 1.0300 support.

What do you think?

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