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The Swiss National Bank  maintained the peg of the franc to the euro in the quarterly meeting. The expected move came despite a surprising rise in employment and an even more surprising rise in growth: the economy grew by 0.6% in Q3, triple the early expectations.

Nevertheless, the SNB found a justification for the rise via another drop in prices: fighting deflation enabled the move that is already 16 months old. Despite a relatively flat EUR/CHF (just above 1.20), USD/CHF has improved its technical “behavior”.

* This article is part of the January 2013 monthly forex report. You can download the full report by joining the newsletter in the form below.

During January, the peg might be challenged due to a weaker euro. As aforementioned, the weakness of the single currency could come from the weakness of the core rather than from the debt crisis. In addition, the ECB could join the currency wars.

For any sign of a change in future policy, it is important to note the CPI release on January 11th. Without a rise in prices, the SNB is likely to leave its policy unchanged – a policy that has been very successful.

The release of the foreign currency reserves report will also shed some light on the situation at the central bank, but these figures are more important for other currencies – the diversification of the of the SNB from euros to other currencies has a significant impact on them, but not on the franc.

Another release worth following is the retail sales report on January 16th, which will show how the economy is doing.

As always, it is important to note that nothing lasts forever and that the  levee could break. The SNB was lonely on the big for many months.

USD/CHF Technical Outlook


USD CHF January 2013 Forex Forecast
USD CHF January 2013 Forex Forecast – Click image to enlarge

During December, USD/CHF made a downwards move, breaking below the 0.9240 line. As aforementioned, this pair has become more technically friendly, trading in clear ranges. The new break in early January is still pending confirmation.


1.09 capped the pair during 2010 and provided support beforehand.   1.0435 was support in 2010 and an area of struggle.

The round number of parity returns to the scene. It is backed by 1.0066. 0.9783 was a double top and provides strong resistance. It showed character in August 2012.

The round number of 0.95 worked as support and has psychological importance as well. After the breakdown, this line capped recovery attempts in September and in November 2012. It remains the top of the range.

0.9240 is the bottom of the current range, working quite well in October and November. It also provided some support back in March 2011. 0.9080, which was a trough recently, is also worth watching. Note that this line defends 0.90.

0.89, is another significant support line that proved its strength early in the year and also back in 2011.

0.8567 is worth mentioning on the downside. It served as support on the way down and then switched to resistance. Further below, 0.8330 was a strong line of support.

0.7820 is the final frontier before the big plunge to the all-time low at 0.7066.