USD/CHF Forecast: Investors Seek Safety Amid China’s COVID-19

USD/CHF Forecast: Investors Seek Safety Amid China’s COVID-19

  • The dollar is edging higher due to China’s rise in COVID cases.
  • Investors are worried China’s COVID-19 restrictions will increase.
  • Sentiment has shifted from bearish to bullish in the charts.

Today’s USD/CHF forecast is bullish. The US dollar had a strong start to the week thanks to surged demand in safe haven as investors remained on edge in the wake of a rise in COVID-19 cases in several Chinese cities that spurred authorities to tighten restrictions.

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Beijing, the capital of China, reported two COVID-19 fatalities on November 20. The city’s most populous district renewed its call for residents to remain home on Monday. Growing cases have made it unlikely that the tight pandemic restrictions will loosen soon.

“The outlook for China’s zero-Covid market will remain a key source of volatility,” said Carol Kong, a currency strategist at the Commonwealth Bank of Australia.

“If we see another step up in restrictions, it indicates to me that the Chinese officials are still wary of any eventual reopening.”

The safe-haven dollar has stabilized after taking a steep plunge earlier in November thanks to hawkish remarks from Federal Reserve officials.

USD/CHF key events today

The US will be releasing the 2-year and 5-year note auction rates. The maturities of US Treasury Notes range from two to ten years. Governments issue treasuries to bridge the gap between the taxes they collect and the money they need to refinance existing debt and/or raise capital. Yield fluctuations should be carefully examined as a sign of the state of the government debt. Investors compare the current auction’s average rate with the rate of earlier sales of the same security.

USD/CHF technical forecast: Sideways move above the 30-SMA

USD/CHF forecast

Looking at the 4-hour chart, we see the price trading above the 30-SMA and the RSI above 50, showing a shift in sentiment from bearish to bullish. The bears were stronger until they got to the 0.9400 support level, where they weakened. After many failed attempts to break below this support level, bulls pushed the price above the 30-SMA.

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Although the sentiment is now bullish, the price needs to do more to confirm a bullish reversal. It is currently trading in a tight sideways move which could lead to an explosive move in either direction. Bulls need to gather enough momentum to break out of this tight range and start making higher highs and lows. This will confirm a bullish reversal.

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Saqib Iqbal

Saqib Iqbal

Saqib Iqbal is a market analyst, prop fund trader and mentor, serving the industry with his analysis and educational content since 2011. The author has great exposure to different financial markets and institutions. He's well-known for his day trading reviews and multiple timeframe analysis.