Home Forex Swiss franc extends declines, USD/CHF sets fifth straight gain on Friday

Swiss franc extends declines, USD/CHF sets fifth straight gain on Friday

by SuperiorInvest


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  • CHF is roughly lower on the week, sending USD/CHF to a fresh six-week high.
  • Swiss producer and import prices fell further in December.
  • SNB Jordan: appreciation of the franc threatens Swiss inflationary stability.

The Swiss franc (CHF) fell further on Friday, extending recent losses as the market returned to a massive rally in the Swiss currency. The USD/CHF climbed around 4.5% from the December low of 0.8332, a 12-year low for the pair.

Switzerland enjoys an economic environment markedly different from its immediate European neighbours, with inflation already well within the 2% maximum target of the Swiss National Bank (SNB) and a stubbornly healthy domestic economy.

The CHF has gained significant value through 2023, climbing nearly 18% bottom-to-bottom against the US dollar (USD) from a peak of $1.1047 USD/CHF in Q3 2022. As the popular CHF outperforms valuations and hinders the SNB’s ability to fine-tune policy using foreign exchange reserves, the SNB recently issued a warning to the wider markets that if the CHF continues to strengthen, it will begin to transmit disinflationary pressure directly into the Swiss economy. .

Having struggled with a disinflationary cycle in the past, the SNB is in no rush to find itself in the same scenario again. The markets seem to have listened SNB Chairman Thomas Jordan’s call now, which sets USD/CHF on pace for its single best weekly performance since late 2022.

USD/CHF Technical Outlook

The American dollar is about 1.85% higher against the Swiss franc this weekrising from Monday’s early bids near 0.8525, tapping the 0.8700 lever on Friday heading into the week’s closing bell.

USD/CHF is poised for its first technical challenge since bottoming out in late December, with the pair pushing straight into technical resistance from the 50-day simple moving average (SMA) in the back half of the week’s trading.

Another technical ceiling is in the price of the 200-day SMA near 0.8850, with short-term technical barriers at the 0.880 handle, where the pair last caught a swing high.

USD/CHF hourly chart

USD/CHF Daily Chart

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