USD/CHF Price Forecast: Approaches 100-day SMA as momentum firms near resistance
USD/CHF edges modestly up some 0.15% as the Greenback bounces from its daily lows as risk appetite improves during the North American session. At the time of writing, the pair exchanges hands at 0.7854.
  • USD/CHF approaches 100-day SMA as price compresses near resistance.
  • RSI nears neutral, hinting at possible bullish momentum shift.
  • Break above 0.7860 targets 0.7900, below 0.7843 exposes 0.7800.

USD/CHF edges modestly up some 0.15% as the Greenback bounces from its daily lows as risk appetite improves during the North American session. At the time of writing, the pair exchanges hands at 0.7854.

USD/CHF Price Forecast: Technical outlook

The USD/CHF daily chart remains neutral to downward-biased, with the pair poised to test the 100-day Simple Moving Average (SMA) at 0.7860 in the near-term. Momentum as measured by the Relative Strength Index (RS) is bearish but about to surpass the neutral level, which would open the door for further upside.

If USD/CHF clears the 100-day SMA, the next stop would be the 20-day SMA at 0.7881. A breach of the latter exposes the 0.7900 figure ahead of the 200-day SMA at 0.7931.

On the flip side, if bears push the pair below the 50-day SMA of 0.7843, it increases the chances for a move toward 0.7800. From here, further downside is seen, with the next area of interest being the March 10 daily low at 0.7747, ahead of the 0.7700 mark.

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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