Although the SNB has cut rates to 0.0% while the Federal Reserve remains on hold, the USDCHF continued its decline, reaching a new low of 0.7957 on Friday—the lowest level since 2011. The pair did rebound slightly into the close, ending the week at 0.7987.
Today, the pair is trading marginally lower at 0.7979 after dipping to a session low of 0.7962 and posting a high of 0.7994. The range so far is relatively narrow, but sellers remain in control.
On the hourly chart, the falling 100-hour moving average is currently at 0.8020. Friday’s high stalled just below that level at 0.80175 increasing that areas importance today.
To shift the short-term bias back toward the upside, buyers would need to push the price above Friday’s close at 0.7987, and then break through the 100-hour moving average at 0.8120. Notably, USDCHF moved above its 100-hour moving average on June 17 and stayed mostly above it until a break lower during trade on Monday of last week. Since then, the pair has trended down from that 100 hour moving average at the time at 0.8170, to Friday’s low at 0.7957
Until the 100-hour moving average can be broken, the bias remains the downside despite the central bank divergence in policy.
Factors that are impacting current market includes:
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Safe-haven flows during global uncertainty into the CHF
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Switzerland’s consistent current account surplus
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Expectations of US rate cuts vs. cautious SNB tone. At some point the Fed will cut and there is pressure from Pres.Trump to do so.
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Technical and sentiment-driven buying of CHF
This article was written by Greg Michalowski at www.forexlive.com.
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