- USD/CHF has appreciated over 1% on Friday as US dollar strength prevails over CHF safe-haven flows.
- The next important resistance on the way up is at 0.96 an area which has previously been firm.
USD/CHF 4-hour chart
It has been an interesting move in USD/CHF on Friday as this pair market usually follows safe-haven flows and this is despite stocks falling as they have during this week. This means when equities struggle the Swiss Franc (CHF) gets firmer, not on this occasion. The same can be said for gold and the Japanese yen as they are both looking tired in today’s session. This insinuates that this is a dollar move and less to do with the risk-off move in equities. So even the sell-off in equities could be a strong move into cash.
The other theory behind the move is that the Swiss National Bank (SNB) could be using the opportunity to buy up some dollars. The SNB is known for their holdings in equities (via ETF’s) and this could be another viable theory. The SNB has actively intervened in the FX markets in the past and this would not be an unusual event.
Away from this, looking at the chart, the pair has now made a strong move past the 0.95 area and 0.96 looks to be the next target. The 50% Fibonacci retracement, general support, psychological number and trendline all meet at this area. Talk about confluence.
The MACD is showing us a mixed picture, the histogram is in the green but the signal lines are under the mid-zone. This could mean that another move lower is on the cards and this is a retracement. The Relative Strength Index, however, is showing signs that the market could move higher as there is some space for a move into the overbought territory.
All in all, the market is still in a downtrend making lower highs and lower lows. If this is to be a change in trend a break of the 0.96 zone would be a good place to start to convince technical analysts the tide might be turning.
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