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USDCHF Marks A Key Technical Break, SNB May Drive Move to Parity

USDCHF Marks A Key Technical Break, SNB May Drive Move to Parity

John Kicklighter, Chief Strategist

Talking Points:

• Though the SNB has abandoned its 1.2000 EURCHF policy, it is still struggling to keep pace with the ECB

• As the ECB discusses the potential of a QE update in December, the SNB is forced to up the ante

USDCHF broke its Franc support the trading day after EURUSD, this policy effort may take the former to parity

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USDCHF extended its charge from last week and has cleared a 2015 wedge resistance. At its current bearing, the pair is not far from parity; and given the SNB's position, we may reach that key level before the year's close. The Swiss Franc is a currency that borrows its convictions from the Euro. While the SNB had to abandon its effort to maintain a floor on EURCHF at 1.2000 (in quite dramatic fashion), the group is still attempting to keep pace with its Eurozone counterpart. That puts the Swiss authority in a precarious position as ECB President Mario Draghi has indicated he will discuss a possible QE upgrade come December. While the Euro and Franc move essentially in tandem, the fundamental connection between the two may leverage greater sway over the latter reflecting the central bank's lack of control and possibly restraint on exchange rates. We revisit the Swiss Franc's technical and fundamental standings in today's Strategy Video.

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