USD/CHF Price Forecast: Tests 20-day SMA as Franc outperforms
USD/CHF edges lower during the North American session on Tuesday, down 0.20%, even though the US Dollar (USD) posted solid gains against most of its peers, except the Swiss Franc (CHF).
  • USD/CHF tests 20-day SMA at 0.7723 as the Swiss Franc outperforms major peers.
  • Fading RSI momentum signals potential consolidation unless buyers reclaim 0.7750.
  • Break below 0.7700 exposes 0.7629, while upside targets 0.7800 and 50-day SMA.

USD/CHF edges lower during the North American session on Tuesday, down 0.20%, even though the US Dollar (USD) posted solid gains against most of its peers, except the Swiss Franc (CHF). At the time of writing, the pair trades at 0.7733 and tests key support at the 20-day Simple Moving Average (SMA) at 0.7723.

USD/CHF Price Forecast: Technical outlook

The technical picture shows USD/CHF peaked at around 0.7766 after reclaiming the 20-day SMA three days earlier, an indication that buyers are stepping in. Although bullish momentum has faded according to the Relative Strength Index (RSI), if sellers fail to drive the exchange rate below the 20-day SMA, buyers could remain hopeful of higher prices.

If USD/CHF climbs past 0.7750, this clears the stage to challenge 0.7800. Once cleared, the next stop will be the 50-day SMA at 0.7845, with the next key resistance seen at the 100-day SMA at 0.7911.

Conversely, if the pair extends its losses past the 20-day SMA and 0.7700, the February 10 swing low of 0.7629 would be in play.

USD/CHF Price Chart – Daily

USD/CHF Daily Chart

Swiss Franc FAQs

The Swiss Franc (CHF) is Switzerland’s official currency. It is among the top ten most traded currencies globally, reaching volumes that well exceed the size of the Swiss economy. Its value is determined by the broad market sentiment, the country’s economic health or action taken by the Swiss National Bank (SNB), among other factors. Between 2011 and 2015, the Swiss Franc was pegged to the Euro (EUR). The peg was abruptly removed, resulting in a more than 20% increase in the Franc’s value, causing a turmoil in markets. Even though the peg isn’t in force anymore, CHF fortunes tend to be highly correlated with the Euro ones due to the high dependency of the Swiss economy on the neighboring Eurozone.

The Swiss Franc (CHF) is considered a safe-haven asset, or a currency that investors tend to buy in times of market stress. This is due to the perceived status of Switzerland in the world: a stable economy, a strong export sector, big central bank reserves or a longstanding political stance towards neutrality in global conflicts make the country’s currency a good choice for investors fleeing from risks. Turbulent times are likely to strengthen CHF value against other currencies that are seen as more risky to invest in.

The Swiss National Bank (SNB) meets four times a year – once every quarter, less than other major central banks – to decide on monetary policy. The bank aims for an annual inflation rate of less than 2%. When inflation is above target or forecasted to be above target in the foreseeable future, the bank will attempt to tame price growth by raising its policy rate. Higher interest rates are generally positive for the Swiss Franc (CHF) as they lead to higher yields, making the country a more attractive place for investors. On the contrary, lower interest rates tend to weaken CHF.

Macroeconomic data releases in Switzerland are key to assessing the state of the economy and can impact the Swiss Franc’s (CHF) valuation. The Swiss economy is broadly stable, but any sudden change in economic growth, inflation, current account or the central bank’s currency reserves have the potential to trigger moves in CHF. Generally, high economic growth, low unemployment and high confidence are good for CHF. Conversely, if economic data points to weakening momentum, CHF is likely to depreciate.

As a small and open economy, Switzerland is heavily dependent on the health of the neighboring Eurozone economies. The broader European Union is Switzerland’s main economic partner and a key political ally, so macroeconomic and monetary policy stability in the Eurozone is essential for Switzerland and, thus, for the Swiss Franc (CHF). With such dependency, some models suggest that the correlation between the fortunes of the Euro (EUR) and the CHF is more than 90%, or close to perfect.

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