Why Is the Swiss Franc Losing Ground to the Greenback?

  • The USD/CHF pulled back to the common ranges 0.9600 & 0.9795
  • German court asked for justification from the ECB bond-buying program
  • SNB Q1 losses exceeded $39 billion dollars

Technical Analysis:

Daily Time Frame:

The USD/CHF gained power and appreciated more than 3% after a five-week low.

The pair is displaying a triangle on the Daily Time Frame, but which side it will breakout from is unknown. Let’s wait and see. 

Since the USD/CHF is in a downward movement, the highest probability is that the breakout will be from the downside. So, this triangle represents a small correction of the downtrend before the pair continues its main direction downward.

Alternatively, a move might be seen as a false breakout to the upside, leaving traders with a false breakout before the downward movement.

USD/CHF Daily Triangle

4-Hr Time Frame:

The chart below is displaying that the USD/CHF is edged by two levels, the 0.9795 & 0.9600. The price is expected to range inside unless a breakout is seen.

Two scenarios define the next move of the USD/CHF on the short run. If the pair is being pushed by the bulls to the 0.9795 resistance, the US Dollars to the Swiss Franc might either bounce back and move downwards inside the channel or breakout and close above the topside of the channel.

If the second scenario happens, the bulls will take control of the bears, leading the USD/CHF rally upward.

USD/CHF - 4hr Channel

Fundamentals Analysis:

The Greenback gains power versus the major currencies in the market due to a positive mood among the investors toward the equity markets, which explains why the Swiss Franc is not demanded as a safe haven currency lately.

CHF - Swiss Franc (Swissy)

A depreciation of the Swiss Franc is explained by a loss of 39 billion US Dollars recorded in Q1 by the Swiss Nation Bank.

As well, the value of the Swiss Franc weakened on Tuesday due to an ECB call from the German constitutional court accusing it of illegal buybacks of governmental bonds.



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