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Swiss Franc (CHF) Price Outlook Positive After 'Currency Manipulator' Tag

Swiss Franc (CHF) Price Outlook Positive After 'Currency Manipulator' Tag

2020-01-16 13:00:00
Martin Essex, MSTA, Analyst and Editor
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CHF price, news and analysis:

  • USD/CHF and EUR/CHF look set to weaken further after the US decision earlier this week to name Switzerland a ‘currency manipulator’.
  • With the SNB now likely to be more cautious about intervening to curb Swiss Franc (CHF) gains, the path of least resistance for the currency is upwards.

CHF gains likely to extend

Further gains for the Swiss Franc (CHF) are likely despite USD/CHF hitting its lowest level since September 2018 and EUR/CHF its lowest since April 2017 in the wake of the US decision earlier this week to add Switzerland back on its list of currency manipulators – a claim the Swiss deny.

USD/CHF BULLISH
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of clients are net long. of clients are net short.
Change in Longs Shorts OI
Daily -1% 5% 0%
Weekly -5% 21% -1%
What does it mean for price action?
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As the chart below shows, USD/CHF has continued to drop back after the US announcement even though the Swiss National Bank will now likely be more cautious about intervening in the markets to curb its strength that reflects, in part, Switzerland’s persistently large current-account surpluses.

USD/CHF Price Chart, Four-Hour Timeframe (November 27, 2019 - January 16, 2020)

Latest USD/CHF price chart.

Chart by IG (You can click on it for a larger image)

EUR/CHF has continued to drop too, even though SNB action to dissuade investors from buying the Franc when looking for a safe haven might be reduced in future.

EUR/CHF Price Chart, Four-Hour Timeframe (November 27, 2019 - January 16, 2020)

Latest EUR/CHF price chart.

Chart by IG (You can click on it for a larger image)

For a technical analysis of EUR/CHF click here

According to the SNB, itsinterventions in the currency market are motivated purely by monetary policy considerations,” and it cited the negative effects on inflation and the economy from a too highly valued Franc.They are not aimed at bringing an advantage for Switzerland by making the Franc undervalued,” it added.

Nonetheless, SNB selling of Francs looks likely to drop and speculators may continue to buy the currency to test whether there are levels at which the central

bank feels it has no choice but to resume its buying of other currencies.

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--- Written by Martin Essex, Analyst and Editor

Feel free to contact me via the comments section below, via email at martin.essex@ig.com or on Twitter @MartinSEssex

DailyFX provides forex news and technical analysis on the trends that influence the global currency markets.

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