Its primary goal is to ensure price stability, while taking due account of economic developments. As the price approaches this long-term support, a potential rebound may be triggered, but it is likely to be capped by the resistance due to the strong bearish price development. As long as the price remains below $1.02, the long-term bearish pressure is likely to persist. Additionally, the U.S. experienced high inflation and economic instability during the 1970s, particularly driven by the 1973 oil crisis, which weakened the dollar. On the other hand, Switzerland’s economy remained stable, with low inflation and a strong financial sector, making the Swiss franc a preferred safe-haven currency.
However, after the exness broker reviews 2011 rebound, the USD/CHF market has been consolidating within a tight range for 13 years, with this consolidation producing bearish price action. These 13 years of consolidation indicate that a break below this prolonged price range could potentially trigger another strong decline in the USD/CHF market. Bouts of volatility (or extreme flat volatility) can be then compared to the typical outcome expressed through the averages. The central bank of the Eurozone (the ECB, European Central Bank) also has influence on the Swissie due to the importance of business and trade between the UE and Switzerland. Any assessment of possible scenarios linked to a macroeconomic decision taken by the ECB has impact on its commercial partners.
USD/CHF Forecast Poll
After the 2001 dot-com bubble burst and the 9/11 attacks, the U.S. economy faced significant challenges, leading to low interest rates and a weaker dollar. The global financial crisis of 2008 exacerbated the situation, as investors flocked to the Swiss franc for its perceived stability during periods of uncertainty. Furthermore, U.S. monetary policy during this time, including aggressive quantitative easing programs, further devalued the dollar. In contrast, Switzerland maintained low inflation and a stable economy, contributing to the USD/CHF decline throughout the decade. The SNB recently lowered its policy rate by 25 basis points to 1.25% in June 2024, a move that aligned with market expectations due to falling inflation and the strong performance of the Swiss franc.
USD/JPY setting up for a bear market bally into the Fed
This shift led to a period of floating exchange rates and a loss of confidence in the U.S. dollar. To further understand the 13 years of consolidation in USD/CHF, the quarterly chart is zoomed into the monthly chart, which clearly shows this consolidation. When prices rebound from the 13-year support, each rebound is capped by the resistance line, increasing the selling pressure. Additionally, the price is trading below the cross of the 50 and 100 Simple Moving Averages, indicating a strong bearish trend in the USD/CHF market. The recent decline began after the price hit the resistance of the 40 SMA and is now challenging the long-term support line. A break below this support line could trigger a strong and rapid downside move.
The strength of the Swiss franc is evident in the chart below, which shows the percentage change in price for major Swiss pairs during the 21st century. It is observed that the Swiss franc has outperformed major currencies, with USD/CHF down by 46.70%, EUR/CHF down by 41.73%, and GBP/CHF down by 56.80%. These figures indicate a strong Swiss franc and a bearish trend for these pairs, reflecting CHF’s continued strength. The Swiss franc is the only franc left in Europe after the rest joined the euro.
USD/CHF advances to near 0.8550 due to less likelihood of an aggressive Fed rate cut
- With the pair approaching long-term support levels, the potential for a major decline looms, particularly if the U.S. dollar remains under pressure.
- Bouts of volatility (or extreme flat volatility) can be then compared to the typical outcome expressed through the averages.
- The result is a price corridor, usually enveloping the weekly close price from above and below, and serves as a measure of volatility.
- U.S. data revealed that core CPI increased by 0.3% in August, exceeding market expectations of 0.2%, which provided support for the U.S. dollar.
- This is due to the positive correlation of the euro, Swiss franc and the British pound.
- Supply closures from Hurricane Francine which is ravaging the Gulf of Mexico are another bullish factor.
This agreement involved the U.S., Japan, West Germany, France, and the U.K., aiming to reduce the U.S. trade deficit by depreciating the dollar. As the U.S. dollar weakened globally, the Swiss franc, viewed as a stable and safe-haven currency, appreciated against the dollar. Additionally, concerns over the U.S. fiscal deficit and rising protectionism contributed to a loss of confidence in the dollar, leading to further declines in the USD/CHF exchange rate during this period. Each participant’s bias is calculated automatically based on the week’s close price and recent volatility. The Swiss National Bank conducts the country’s monetary policy as an independent central bank. It is obliged by the Constitution and by statute to act in accordance with etoro review the interests of the country as a whole.
It is often seen as a safe-haven currency (any globally traded currency that serves as a reliable and stable store of value). In times of uncertainty, the franc usually stays stable or appreciates against its European counterparts. The USD/CHF tends to have a negative correlation with the EUR/USD and GBP/USD currency pairs.
The Euro is the second reference currency in the world (after the US Dollar) and any move by its central bank, the ECB, has consequences on the assessment of its partners. Finally, the SIX Swiss Exchange (formerly SWX Swiss Exchange), based in Zurich, is Switzerland’s principal stock exchange (the other being Berne eXchange). In this chart, the close price is shifted behind so it corresponds to the date when the price for that week was forecasted. This enables the comparison between the average forecast price and the effective close price. The European Central Bank is expected to cut key rates by 25 bps at the September policy meeting. ECB President Christine Lagarde’s presser and updated economic forecasts will be closely scrutinized for fresh policy cues.
Inflation spiked following the COVID-19 pandemic, but by 2023 had decreased to 2.13%. This downward trend in inflation could further reinforce expectations of monetary easing by the SNB, adding downward pressure on the Swiss franc if such measures are implemented. The USD/CHF pair has been under consistent downward pressure as the U.S. dollar struggles amid softening Treasury yields and expectations of a more accommodative stance from the Federal Reserve. U.S. data revealed that core CPI increased by 0.3% in August, exceeding market expectations of 0.2%, which provided support for the U.S. dollar. Meanwhile, the Swiss franc, known for its safe-haven status, continues to benefit from global economic uncertainties, reinforcing its strength against the dollar. The third major drop in USD/CHF occurred from 2001 to 2011, driven by the prolonged weakness of the U.S. dollar and the Swiss franc’s status as a safe-haven currency.
It is a sentiment indicator which delivers actionable price levels, not merely “mood” or “positioning” indications. Traders can check if there is unanimity among the surveyed experts – if there is excessive speculator sentiment driving a market – or if there are divergences among them. When sentiment is not at extremes, traders get actionable price targets to trade upon. When there is deviation between actual market rate and value reflected in forecasted rate, there is usually an opportunity to enter the market. Gold preserves its bullish momentum and trades near $2,580 after setting a new record-high slightly above this level. The 10-year US Treasury bond yield stays in the red below 3.7% as markets reassess the odds of a large Fed rate cut, helping XAU/USD push higher.
There is speculation that further rate cuts may follow, depending on how inflation trends develop in the coming months. The SNB expects the economy to grow modestly, with GDP forecasted to rise by 1% in 2024 and 1.5% in 2025, alongside a slight increase in unemployment and stable production capacity. The long-term trend for USD/CHF remains strongly bearish, as seen in the quarterly chart below. The chart highlights the continuation of strong bearish pressure on USD/CHF, marked by green arrows. The first significant drop is observed from 1970 to 1978, driven by a combination of geopolitical and economic factors. The collapse of the Bretton Woods system in 1971, which ended the U.S. dollar’s convertibility to gold, marked a critical turning point.
USD/CHF continues to weaken as the US dollar remains under pressure, with US Treasury yields continuing to decline. The decline in U.S. yields signals investor expectation of a softer monetary policy from the Federal Reserve (Fed). The decline in Switzerland’s foreign currency reserves suggests that the SNB may have limited room for further intervention in the currency markets, which could allow the CHF to strengthen naturally. A continued drop in reserves might indicate that the SNB is less willing or able to weaken the franc, potentially paving the way for CHF appreciation. If the SNB scales back its interventions, the franc could gain momentum, especially as the U.S. dollar faces pressure from the Fed’s dovish stance. The Bank for International Settlements (BIS) is also an organization to take into account when trading the Swiss Franc.