The USD/CHF fell fairly hard on Monday as the Dollar took it on the chin against many currencies around the globe. It appears that the “risk on” trade has come roaring back over the last couple of sessions, and the reaction in this market wasn’t any different than the other ones.
The Swiss Franc is being monitored by the Swiss National Bank as the rise of the value in that currency has played havoc with the Swiss economy. The SNB isn’t so worried about this pair, but the EUR/CHF is certainly at the forefront of their attention. The pair is one you will have to watch if you trade anything CHF-related. The USD/CHF rate isn’t that important to the SNB overall, but the fact is that if the EUR/CHF falls below the 1.20 level, the Swiss will certainly intervene in that pair and this will cause a selloff of the Franc in all markets.
While looking at this chart, there is a clear support level that we are sitting on right now. If the pair manages to break below the 0.92 level, this could trigger more selling. Again though, selling at that point will have to be accompanied by the monitoring of the EUR/CHF pair. As long as it stays above the 1.20 mark, it should be safe.
On the other hand, if we see some kind of supportive candle in the immediate area on the daily close, we are more than willing to go ahead and have a go on the long side of the trade. The US economy is certainly doing better the many others, and the Swiss are going to be hurt by the recession in the European Union as it buys 80% of Switzerland’s exports.
We are currently still bullish at the moment in this pair, but have to admit the move on Monday does have us questioning the ability for the uptrend to continue. Because of this, we are going to wait until the daily close for Tuesday to determine if there is anything to be done currently.
Written by FX Empire