- USD/CHF weakens to around 0.9130 in Monday’s Asian session, losing 0.22% on the day.
- The positive view of the pair prevails above the 100-day EMA with the bullish RSI indicator.
- The first upside barrier emerges at 0.9200; the initial support level is located at 0.9082.
The USD/CHF pair edges lower to near 0.9130 during the Asian trading hours on Monday, pressured by the weakening of the US Dollar (USD). The cautious mood in the markets ahead of Donald Trump’s presidential inauguration provides some support to the safe-haven flows, benefiting the Swiss Franc (CHF).
Technically, USD/CHF keeps a bullish vibe at present as the price is well supported above the key 100-day Exponential Moving Average (EMA) on the daily chart. Additionally, the upward momentum is supported by the 14-day Relative Strength Index (RSI), which is located above the midline near 60.50, suggesting that further upside looks favorable.
The crucial resistance level for USD/CHF emerges at 0.9200, presenting the psychological level, the high of January 13, and the upper boundary of the Bollinger Band. Any follow-through buying above this level could pave the way to 0.9225, the high of May 1. The next upside barrier is seen at 0.9300, the high of March 17, 2023.
On the other hand, the initial support level is at 0.9082, the low of January 15. Extended losses below this level could expose the key contention level at 0.9000, the round figure. The additional downside filter to watch is 0.8980, the lower limit of the Bollinger Band, followed by 0.8874, the 100-day EMA.
USD/CHF daily chart
Swiss Franc FAQs
The Swiss Franc (CHF) is Switzerland’s official currency. It is among the top ten most traded currencies globally, reaching volumes that well exceed the size of the Swiss economy. Its value is determined by the broad market sentiment, the country’s economic health or action taken by the Swiss National Bank (SNB), among other factors. Between 2011 and 2015, the Swiss Franc was pegged to the Euro (EUR). The peg was abruptly removed, resulting in a more than 20% increase in the Franc’s value, causing a turmoil in markets. Even though the peg isn’t in force anymore, CHF fortunes tend to be highly correlated with the Euro ones due to the high dependency of the Swiss economy on the neighboring Eurozone.
The Swiss Franc (CHF) is considered a safe-haven asset, or a currency that investors tend to buy in times of market stress. This is due to the perceived status of Switzerland in the world: a stable economy, a strong export sector, big central bank reserves or a longstanding political stance towards neutrality in global conflicts make the country’s currency a good choice for investors fleeing from risks. Turbulent times are likely to strengthen CHF value against other currencies that are seen as more risky to invest in.
The Swiss National Bank (SNB) meets four times a year – once every quarter, less than other major central banks – to decide on monetary policy. The bank aims for an annual inflation rate of less than 2%. When inflation is above target or forecasted to be above target in the foreseeable future, the bank will attempt to tame price growth by raising its policy rate. Higher interest rates are generally positive for the Swiss Franc (CHF) as they lead to higher yields, making the country a more attractive place for investors. On the contrary, lower interest rates tend to weaken CHF.
Macroeconomic data releases in Switzerland are key to assessing the state of the economy and can impact the Swiss Franc’s (CHF) valuation. The Swiss economy is broadly stable, but any sudden change in economic growth, inflation, current account or the central bank’s currency reserves have the potential to trigger moves in CHF. Generally, high economic growth, low unemployment and high confidence are good for CHF. Conversely, if economic data points to weakening momentum, CHF is likely to depreciate.
As a small and open economy, Switzerland is heavily dependent on the health of the neighboring Eurozone economies. The broader European Union is Switzerland’s main economic partner and a key political ally, so macroeconomic and monetary policy stability in the Eurozone is essential for Switzerland and, thus, for the Swiss Franc (CHF). With such dependency, some models suggest that the correlation between the fortunes of the Euro (EUR) and the CHF is more than 90%, or close to perfect.
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