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  • USD/CHF stalling at key resistance just below the 200-DMA.
  • All eyes on central banks as geopolitics take a back seat.  

USD/CHF has been unable to advance to the 200-daily moving average while the Dollar struggles with its own battle below 98.50 in the DXY. Currently, USD/CHF is capped, -0.05% having travelled between a range of 0.9889 and 0.9931.  

Markets are a little subdued this week, soaking up the prospects of trade talks recommencing as soon as next week and while we are in a Federal reserve speaker blackout period until the interest rate decision later this month. Instead. the focus has been on Brexit, but that too has settled down alleviating risk asset classes of their duties, for the time being, which is allowing CHF some time off – much to the relief of the Swiss National Bank.  

ECB is bound to shake things up

However, we have the European Central Bank around the corner which is bound to shake things up. The SNB will be paying close attention to the ECB, for Swiss growth has been slowing down, suggesting another rate cut could be on the menu again.

If the ECB acts as expected, by cutting rates with renewed QE as the main headwind for the euro, then that will be problematic for the SNB which is already battling to keep the EUR/CHF in a comfortable range with respect to the nation’s export business with the eurozone – Indeed, the global uncertainty, linked to the trade war and Brexit, has strengthened the value of the Swiss franc since the summer – Should we see a rise in global uncertainty, the SNB may need to implement other measures, including a rate cut.

As for the Dollar, while it struggles to get back through 0.9950,  it remains robust despite NFPs disappointment and should US Consumer Price Index and US Retail Sales impress,  the Dollar and USD/CHF should firm, especially on an uber dovish ECB.  

USD/CHF levels

USD/CHF  is en route to the 200-day moving average at 0.9950. Bulls will be now looking to base above the late March lows just below 0.99 the figure. However, a break to the downside will open risk to the 23.6% Fibonacci in the 0.9860s and then the 50% Fibo’ just below the 0.98 handle.