Forex Flash: Look for Franc stability against Euro – Wells Fargo

FXstreet.com (Barcelona) - Nick Bennenbroek, Head of Currency Research at Wells Fargo believes that the Swiss Franc will remain stable against the Euro and weaken against the dollar in the year ahead.

He feels that the tone of the activity has improved and suggests moderately positive economic growth in 2013. With ongoing deflation however, we expect the central bank to maintain its current interest rate and FX policy, meaning a steady franc versus the Euro and weaker franc versus the U.S. Dollar.

From a technical perspective, Bennenbroek notes that the 20 day MA has crossed below the 50, a bearish signal and the RSI if 26 is over extended to the downside. Additionally, other momentum indicators are consistent with further declines.

He writes, "After breaking below September-November lows, the next downside targets are CHF0.9043 (May low), CHF0.9002 (April low), and CHF0.8931 (February low). Resistance is at CHF0.9383 (December high), CHF0.9424 (200-day MA), and CHF0.9513 (November high). EURCHF resistance is at CHF1.2169 (recent high), while support is at CHF1.2030 (November low)."