- Swiss franc losses strength versus USD, EUR despite risk aversion.
- USD/CHF modestly lower for the day after finding resistance at 0.9500.
The USD/CHF was trading around 0.9470, modestly lower from the level it closed on Friday. The pair bottomed during the European session at 0.9390, following rate cuts from many central banks. It then rebounded as the DXY turned positive, trimming losses.
The 0.9500 area capped the recovery of the US dollar. From a fundamental perspective, the Swiss continues to be a safe haven but the greenback has strengthened over the last session. Analysts at Citibank explained: “CHF’s safe-haven status has helped maintain its strength against the EUR and USD. But, CHF strength is still a key worry for the SNB (Swiss National Bank) and they have therefore stepped up FX intervention to prevent it. Citi expect the SNB to hold off on rate cuts as long as the ECB holds off and FX interventions curb CHF upside”.
EUR/CHF reached earlier on Monday at 1.0537, the lowest since July 2015 and then rebounded. It recently climbed back above1.0570 to test daily highs. Still, it remains under pressure, holding near the 1.0540 critical support area.
USD/CHF technical outlook
The primary trend continues to point to the downside, but in the short-term USD/CHF was moving with a bullish bias. Last week the 0.9550/60 area capped the upside, and on Monday it is retreating. A break above 0.9500 could strengthen the greenback for a test of 0.9550 while a consolidation above 0.9560 would point to more gains.
On the flip side, 0.9420 and then 0.9390 are critical barriers that if broken, should lead to a test of 0.9320.
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