The USD/CHF rate rose slightly on Monday, around 0.15% as the US dollar (USD) rebounded from daily lows as risk appetite improved during the North American session. At the time of writing, the pair is changing hands at 0.7854.
USD/CHF Price Forecast: Technical Outlook
The USD/CHF daily chart remains neutral or bearish, and the pair is poised to test the 100-day uncomplicated moving average (SMA) at 0.7860 in the near future. The momentum, as measured by the Relative Strength Index (RSI), is bearish but will soon break above neutral, opening the door for further gains.
If USD/CHF settles the 100-day SMA, the next stop will be the 20-day SMA at 0.7881. A break of the latter will expose the 0.7900 level ahead of the 200-day SMA at 0.7931.
On the other hand, if the bears push the pair below the 50-day SMA of 0.7843, it increases the chances of a move towards 0.7800. Further declines can be seen from here, and the next area of ​​interest is the daily low from March 10 at 0.7747, ahead of the 0.7700 level.
USD/CHF price chart – daily
Frequently asked questions about the Swiss franc
The Swiss franc (CHF) is the official currency of Switzerland. It is among the top ten most frequently traded currencies in the world, reaching volumes far exceeding the size of the Swiss economy. Its value is determined, among others, by broad market sentiment, the economic condition of the country and the actions taken by the Swiss National Bank (SNB). From 2011 to 2015, the Swiss franc was pegged to the euro (EUR). The link was abruptly removed, causing the value of the franc to boost by more than 20% and causing confusion in the markets. Although this link no longer applies, the fortunes of the CHF are usually highly correlated with euro rates due to the Swiss economy’s hefty dependence on the neighboring eurozone.
The Swiss franc (CHF) is considered a secure asset, i.e. a currency that investors willingly buy during periods of market stress. This is due to Switzerland’s perceived status in the world: a stable economy, a powerful export sector, gigantic central bank reserves and a long-standing political stance towards neutrality in global conflicts make this country’s currency a good choice for investors escaping risk. Turbulent times are likely to strengthen the value of the CHF relative to other currencies that are perceived as riskier to invest in.
The Swiss National Bank (SNB) meets four times a year – once a quarter, less frequently than other major central banks – to decide on monetary policy. The bank aims for annual inflation below 2%. If inflation is above target or remains above target for the foreseeable future, the bank will attempt to limit price increases by raising the policy rate. Higher interest rates are generally positive for the Swiss franc (CHF) because they lead to higher yields, making the country a more attractive place for investors. On the contrary, lower interest rates tend to weaken the CHF.
Macroeconomic data publications in Switzerland are crucial for assessing the state of the economy and may affect the valuation of the Swiss franc (CHF). The Swiss economy is generally stable, but any sudden change in economic growth, inflation, the current account or the central bank’s foreign exchange reserves could trigger changes in the CHF. Overall, high economic growth, low unemployment and high levels of confidence are good for CHF. Conversely, if economic data indicate weakening dynamics, CHF will likely depreciate.
As a compact and open economy, Switzerland is largely dependent on the health of the economies of neighboring eurozone countries. The broadly understood European Union is Switzerland’s main economic partner and a key political ally, therefore the stability of macroeconomic and monetary policy in the euro zone is crucial for Switzerland, and therefore for the Swiss franc (CHF). With such a relationship, some models suggest that the correlation between the fate of the euro (EUR) and CHF is over 90%, which is close to ideal.
