- The US fiscal concerns intensify as the Senate approves the “Law of a Great Trump Project”.
- The USD/CHF bounces after trying a new minimum of the year below 0.7900 on Tuesday.
- A hammer -like candle is formed in the daily chart, highlighting the exhaustion of the trend.
The Swiss Franco (CHF) is stabilized against the US dollar (USD) after registering a new minimum of the year on Tuesday.
With the USD/CHF, quoting above 0.7900 at the time of writing, prices continue close to their lowest levels since September 2011.
The pressure on the US dollar intensified on Tuesday after the Senate approved the fiscal bill “A Great Beautiful” of President Trump.
After hours of tense negotiations, Vice President JD Vance issued a decisive vote to boost the project to the next voting round in the House of Representatives.
The broad legislation extends key provisions of the 2017 fiscal cuts and introduces new deductions, including tax exemptions on tips and overtime. It also increases financing for defense, border security and space exploration.
The bill, also known as the mega GOP bill, has generated restlessness among bond and foreign exchange investors. The budget bill is expected to increase the US deficit by 3.3 billion dollars during the next decade, which generates concerns about the sustainability of US debt.
However, despite the growing concerns about the US fiscal policy and the increase in public debt, technical factors have temporarily limited the downward movement.
The USD/Chf bounces while a hammer -like candle indicates the exhaustion of the bassist trend
The USD/CHF daily chart shows signs of possible exhaustion in the predominant bearish trend.
After a prolonged bearish movement, the last candle has formed what resembles a hammer pattern, with a small small body near the top of the range and a long wick. This indicates a strong intra -sale that was counteracted by buying pressure at the closure.
USD/CHF daily graphics
This pattern, which arises just above the key support around zone 0.7821–0.7827, suggests a possible bullish reversal or a short -term relief rebound.
The Relative Force Index (RSI) is deeply above 26, reinforcing the idea that the bearish impulse may be overexted.
Although the general trend remains bassist, since the price is well below the simple mobile socks (SMA) of 10 and 50 days.
The hammer -type candle indicates that sellers may be losing control. A bullish confirmation candle above the psychological level of 0.8000 could validate a temporary recovery, potentially carrying the minimum of April to 0.8060.
Franco Swiss faqs
The Swiss Franco (CHF) is the official currency of Switzerland. It is among the ten most negotiated coins worldwide, reaching volumes that far exceed the size of the Swiss economy. Its value is determined by the general feeling of the market, the country’s economic health or the measures taken by the Swiss National Bank (SNB), among other factors. Between 2011 and 2015, the Swiss Franco was linked to the euro (EUR). The link was eliminated abruptly, which resulted in an increase of more than 20% in the value of the Franco, which caused a turbulence in the markets. Although the link is no longer in force, the fate of the Swiss Franco tends to be highly correlated with that of the euro due to the high dependence of the Swiss economy of neighboring Eurozone.
The Swiss Franco (CHF) is considered a safe shelter asset, or a currency that investors tend to buy in times in markets. This is due to the perception of Switzerland in the world: a stable economy, a strong export sector, great reserves of the Central Bank or a long -standing political position towards neutrality in global conflicts make the country’s currency a good option for investors fleeing risks. It is likely that turbulent times strengthen the value of the CHF compared to other currencies that are considered more risky to invest.
The Swiss National Bank (BNS) meets four times a year (once each quarter, less than other important central banks) to decide on monetary policy. The bank aspires to an annual inflation rate of less than 2%. When inflation exceeds the objective or it is expected that it will be overcome in the predictable future, the bank will try to control the growth of prices raising its type of reference. The highest interest rates are usually positive for the Swiss Franco (CHF), since they lead to greater returns, which makes the country a more attractive place for investors. On the contrary, lower interest rates tend to weaken the CHF.
Macroeconomic data published in Switzerland are fundamental to evaluate the state of the economy and can affect the assessment of the Swiss Franco (CHF). The Swiss economy is stable in general terms, but any sudden change in economic growth, inflation, current account or foreign exchange reserves have the potential to trigger movements in the CHF. In general, high economic growth, low unemployment and a high level of trust are good for Chf. On the contrary, if the economic data suggests to a weakening of the impulse, the CHF is likely to depreciate.
As a small and open economy, Switzerland depends largely on the health of the neighboring economies of the Eurozone. The European Union as a whole is the main economic partner of Switzerland and a key political ally, so the stability of macroeconomic and monetary policy in the Eurozone is essential for Switzerland and, therefore, for the Swiss Franco (CHF). With such dependence, some models suggest that the correlation between the fate of the euro (EUR) and the Swiss Franco is greater than 90%, or almost perfect.
Source: Fx Street
I am Joshua Winder, a senior-level journalist and editor at World Stock Market. I specialize in covering news related to the stock market and economic trends. With more than 8 years of experience in this field, I have become an expert in financial reporting.
