- The USD/CHF has difficulties in gaining significant traction and remains confined in a narrow range.
- The formation of an ascending triangle in the schedule graphs supports the additional profits perspectives.
- A convincing rupture below the level of 0.8200 will be considered a new trigger for bassists.
The USD/CHF pair extends its price consolidation movement during the Asian session on Wednesday and remains confined in a range held during the last two weeks in the middle of mixed signals. The appearance of some American dollar purchases (USD) provides some support for cash prices, although the reactivation of the safe refuge demand acts as a wind against.
Seeing the widest panorama, the recent rebound since the neighborhood of the 0.8100 media, or the lowest level since April 22 played last week, has been along an ascending slope line. This, together with a strong horizontal barrier near the region of 0.8245-0.8250, constitutes the formation of an ascending triangle in the schedule graphics and favors the USD/CHF bullies. However, it will be wise to expect a convincing break through said obstacle before positioning for new profits.
Cash prices could then overcome an intermediate obstacle near the 0.8275 area and aspire to recover the round figure of 0.8300. The impulse could extend even more towards the next relevant resistance near the offer zone of 0.8325-0.8330. Some continuation purchases will suggest that the USD/CHF torque has formed a short term minimal and will pave the path for additional profits.
On the other hand, the support of the ascending trend line, currently located just above the level of 0.8200, could continue to protect the immediate side down. This is followed by the minimum monthly oscillation, around the region of 0.8155, which if it breaks, will look like a new trigger for bassists. The subsequent fall could drag the USD/CHF torque to the round figure of 0.8100 on a route to the minimum of April oscillation, around the 0.8040 region, or the lowest level since September 2011.
4 hours of USD/CHF
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.
