- USD/CHF is trading just under flat on Monday at 0.9079.
- The pair is relatively weak and potential SNB action is on the cards.
Fundamental backdrop - USD problems for the Swiss National Bank (SNB)
Since the post coronavirus high of 0.99017, the pair has now fallen a massive 8.25% in 179 trading days. This poses a problem for the Swiss National Bank as they will struggle to get hold of their inflation rate (too low) and swiss exports could become too expensive.
The big question is what can the SNB do? They have used negative interest rates, QE and asset purchases of various kinds. Maybe the SNB were looking for some help from the ECB, but it never came. There has been some verbal dissatisfaction against the strong EUR but the fact that there was no policy action might have disappointed the SNB. Some ECB action could have helped the franc (CHF) as it would have meant some broad USD strength against a whole basket of currencies. The EUR/CHF rate is more important for the SNB and there has been lots of CHF strength there too but the structure of the EUR/CHF chart is slightly better than the USD/CHF chart from an SNB perspective.
USD/CHF daily chart
Looking at the daily chart, there is a firm consolidation a very low levels. The price looks to be heading back to the 0.90 area once again and the price has been supported there twice before. The if the green support level is broken the price will be trading at its lowest level since 26th January 2015. This was when the price was recovering following the SNB cap removal on 15th January 2015.
The indicators are showing a bullish divergence this is when the indicator waves make higher lows and the price makes lower low waves. Although this can be a bullish signal it does often indicate that the momentum of a move is slowing down and not always a sign of a reversal. Much of the USD move will depend on this weeks FOMC meeting. If the Fed signal they are going to be more accommodative or sound more bearish tones this CHF strength could continue and force the SNB to act yet again.
Additional levels
Information on these pages contains forward-looking statements that involve risks and uncertainties. Markets and instruments profiled on this page are for informational purposes only and should not in any way come across as a recommendation to buy or sell in these assets. You should do your own thorough research before making any investment decisions. FXStreet does not in any way guarantee that this information is free from mistakes, errors, or material misstatements. It also does not guarantee that this information is of a timely nature. Investing in Open Markets involves a great deal of risk, including the loss of all or a portion of your investment, as well as emotional distress. All risks, losses and costs associated with investing, including total loss of principal, are your responsibility. The views and opinions expressed in this article are those of the authors and do not necessarily reflect the official policy or position of FXStreet nor its advertisers.
Latest Forex News
Editors’ Picks
AUD/USD battles 0.7700 amid covid, stimulus woes-led risk-aversion
AUD/USD holds the lower ground, testing the 0.7700 level amid broad risk-aversion that has triggered a bounce in the safe-haven US dollar. Uncertainty over the US stimulus, worries over new covid strain and lockdowns weigh on the risk appetite.
GBP/USD pressured towards 1.3650 amid risk-off, ahead of UK jobs
GBP/USD remains depressed, heading towards 1.3650. The cable responds to the fresh risk-off mood after flashing a two-day losing streak. UK virus data suggests an improvement in covid conditions, Health Secretary Matt Hancock gives credits to activity restriction measures.
Gold rises 0.3%, but the market still looks indecisive
Gold still locked in Monday's indecisive price range. The yellow metal is still stuck in the indecisive price range of $1,847 to $1,868, marked by Monday's Doji candle. Worsening of risk aversion may yield a range breakdown.
Ripple is South Korea’s most popular cryptocurrency, but XRP price stays pressured
XRP/USD bounces off intraday low of 0.2647, stays below 21-day SMA for fifth day. As per the latest report from Messari, Bitcoin and Ripple are the most popular cryptocurrencies in South Korea.
US Dollar Index: A breach of 90.00 exposes 2021 lows at 89.20
The inability of USD-bulls to push further north of recent tops in the 91.00 region in past sessions prompted sellers to return to the markts and shifted the attention to the potential continuation of the downtrend.