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With a very stable EUR/USD came a very stable EUR/CHF and USD a USD/CHF. The Swiss National has been able to diversify away from euros using this calm: the holdings of euros fell from 60% to 48% according to the most recent report.

As long as Europe remains stable, the Swiss franc will float in a relatively wide range against the euro. In turn, USD/CHF maintains the same range of 0.92 to 0.9450.

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

In Switzerland, inflation remains too low for the SNB: prices rose by only 0.3% last month, and on a yearly basis, Switzerland suffers from deflation: prices fell 0.4% year over year.

And while the country enjoys an extremely low unemployment rate of 2.9%, the forward looking SVME PMI continues to point to contraction for a sixth consecutive month. The fall to only 43.6 points show a faster contraction.

Also the ZEW Economic Expectations indicator continues pointing to depressed activity: -28.9 points – also for the 6th straight month.

In the current environment, and with the current state of the Swiss economy, the SNB is in no rush to make any changes.

Of note during November are the consumer climate indicator, the updated ZEW indicator and most importantly the trade balance figure, which still shows a nice surplus so far.

In case something happens in Europe or the SNB isn’t on guard, we could see another attack of EUR/CHF on 1.20. So far, the central bank has been very successful at maintaining the floor, for 14 months so far.

However, 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 Forex Forecast November 2012 – Click image to enlarge

USD/CHF traded in the lower part of the range during October, and a temporary dip under 0.9240 didn’t have a follow through. The de-facto euro-peg limits the movements.


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. It remains the top of the range.

0.9240 is the bottom of the current range, working quite well in October. It also provided some support back in March 2011. 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.