USD/CHF PRICE ACTION ADVANCING OFF MULTI-YEAR LOWS AS SWISS FRANC SURRENDERS GAINS AHEAD OF SEPTEMBER SNB POLICY REVIEW
- USD/CHF price has exploded over 200-pips so far this month as the US Dollar pivots higher
- Swiss Franc falling sharply after hitting its strongest level against the USD in over five years
- The SNB monetary policy update on tap has potential to amplify the rebound by USD/CHF
USD/CHF price action is ‘rising from the dead’ with the US Dollar ripping higher as markets swoon. A resurgence of volatility and risk aversion over recent trading sessions largely underpins broader US Dollar strength across major FX peers, such as the Swiss Franc.
The 225-pip rebound staged by spot USD/CHF so far this month might be voiced as a welcomed development by Swiss National Bank officials, who are due to release their latest monetary policy review on Thursday, 24 September at 07:30 GMT.
USD/CHF PRICE CHART: WEEKLY TIME FRAME (AUG 2018 TO SEP 2020)
This is considering a relatively weaker Swiss Franc stands to alleviate some pressure on the central bank to act forcefully with currency intervention aimed at stemming the sharp slide by USD/CHF since late last year. As such, it is likely that the SNB stands pat on policy and leaves its target interest rate unchanged at -0.75%.
The Swiss Franc could potentially fall further with USD/CHF advancing as the broader US Dollar extends its rally on the back of disconcerting global PMI data. Technical analysis also points to the possibility of USD/CHF price action prolonging its rebound off its lowest level since 2015 when the SNB de-pegged the Swiss Franc. An impending Bollinger Band squeeze suggests spot USD/CHF prices could consolidate back higher.
USD/CHF PRICE CHART: DAILY TIME FRAME (14 MAR TO 23 SEP 2020)
Also, recent US Dollar strength against the Swiss Franc has propelled USD/CHF comfortably above its 50-day moving average. This appears to have invalidated its prior-standing bearish trend highlighted by the series of lower highs recorded over recent months. Eclipsing the 23.6% Fibonacci retracement level of its year-to-date trading range opens up the door for USD/CHF to potentially stretch toward the 100-day moving average with the 0.9200-price level posing as possible technical support.
| Change in | Longs | Shorts | OI |
| Daily | -2% | 9% | 2% |
| Weekly | -13% | 2% | -8% |
-- Written by Rich Dvorak, Analyst for DailyFX.com
Connect with @RichDvorakFX on Twitter for real-time market insight
