The week started pretty well for the USD/CHF as the currency pair marked a fresh new high of 0.9951 on Monday. The move came after market participants grew increasingly worried about the strength of the global economy and shed their holdings in risky assets such as the Franc, while buying U.S. dollars at the same time. On Tuesday, the sentiment among investors took another hit, which sent the USD/CHF even higher to levels 0.997, which is the currency pair’s highest rate since February 2010. But, in the middle of the week, the bulls began to give way to bears, which suddenly became active when the Franc moved closer and closer to parity with the U.S. dollar. After taking the initiative from the bulls, the bears didn’t lose it in the next couple of days, completely dominating the market. They even grew increasingly strong as the ECB President Mario Draghi announced that the central bank will do all that is necessary to keep the Eurozone from collapsing. The first stop on the way down was the 25-period moving average, where the USD/CHF met with the first significant support level. The currency pair, however, did not have much trouble overcoming it and on Thursday it broke sustainably below it. After the positive news for Europe was announced, the selling pressure intensified, sending the USDCHF below its 50-period moving average as well. Today we are having a very calm session, in which the Franc is trading in a very tight range. The Swiss currency is very close to the rates of late July, when we tried to break the upward trend on three separate occasions, but all of them failed. As a result of these failed attempts a strong support formed, which will probably be tested today if the sentiments among investors continue to pick up. So far the bulls have succeeded in holding the USD/CHF above 0.9760, even after the KOF economic barometer figures came in better than expected in the early hours on Friday. The number came in at 1.43, which was its highest reading since September 2011. Analysts were expecting a more modest increase to 1.24 from a reading of 1.16 for the previous period. After the announcement the bulls remained focused solely on holding their ground as they continue to experience significant pressure from the bears. If, however, they manage to regain their strength they will probably meet with significant resistance at the 50-period moving average, around 0.9847. A move on the upside is something that should be seen as likely if we trust what oscillators are telling us. The relative strength index is very close to the lower band of its range and the stochastic is already in oversold territory, standing at 15. The MACD has just pushed below the key 0 level, but it is still not issuing any buy signals.
The information in this analysis is collected from different sources and should serve for informative purposes only. The author shall not be held responsible for the validity of the presented information. No part of this analysis recommends the purchase or sale of a currency pair or any other financial instrument.