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  • USD/CHF is trading just under flat on Monday at 0.9079.
  • The pair is relatively weak and potential SNB action is on the cards.

Fundamental backdrop – USD problems for the Swiss National Bank (SNB)

Since the post coronavirus high of 0.99017, the pair has now fallen a massive 8.25% in 179 trading days. This poses a problem for the Swiss National Bank as they will struggle to get hold of their inflation rate (too low) and swiss exports could become too expensive. 

The big question is what can the SNB do? They have used negative interest rates, QE and asset purchases of various kinds. Maybe the SNB were looking for some help from the ECB, but it never came. There has been some verbal dissatisfaction against the strong EUR but the fact that there was no policy action might have disappointed the SNB. Some ECB action could have helped the franc (CHF) as it would have meant some broad USD strength against a whole basket of currencies. The EUR/CHF rate is more important for the SNB and there has been lots of CHF strength there too but the structure of the EUR/CHF chart is slightly better than the USD/CHF chart from an SNB perspective. 

USD/CHF daily chart

Looking at the daily chart, there is a firm consolidation a very low levels. The price looks to be heading back to the 0.90 area once again and the price has been supported there twice before. The if the green support level is broken the price will be trading at its lowest level since 26th January 2015. This was when the price was recovering following the SNB cap removal on 15th January 2015. 

The indicators are showing a bullish divergence this is when the indicator waves make higher lows and the price makes lower low waves. Although this can be a bullish signal it does often indicate that the momentum of a move is slowing down and not always a sign of a reversal. Much of the USD move will depend on this weeks FOMC meeting. If the Fed signal they are going to be more accommodative or sound more bearish tones this CHF strength could continue and force the SNB to act yet again. 

USD/CHF SNB intervention

Additional levels