Currency

Currencies: The Swiss franc takes a beating – 2024-03-25


The Swiss National Bank’s surprise decision to cut its key rates by 25 basis points did not go unnoticed. In the wake of this decision, which was made possible by the effectiveness of the Bank’s anti-inflation measures, the Swiss franc fell back against all G10 currencies.

A few weeks ago, we alerted you to a possible EUR/CHF selling opportunity. But that was before. The 0.95/0.9550 pivot point we were highlighting has since been breached, signalling a paradigm shift. So, with equity markets still in risk-on mode, the Swiss franc is becoming less attractive, at least until the next shock (oil, geopolitical, military, take your pick).


Technically, the EURCHF has broken out of the downtrend that has been underway since 2021, by breaking above 0.97. The validation of bullish divergences on counter-trend indicators reinforces this trend reversal scenario. The way is now open for a return to parity. Initial support lies around 0.95.

EURCHF


Source: Bloomberg


Elsewhere in the news, the US Federal Reserve maintained its rates, with a dovish speech that left the door open to a rate cut as early as June. The dollar logically took the hit, even if the chart structure of the weekly dollar index (DXY) remains complex (a clever word to express the analyst’s perplexity in the face of the current situation). The only certainty is that the Japanese yen remains weak against other currencies, despite the Bank of Japan’s tightening of monetary policy. As a result, the USDJPY has come very close to its 2022-2023 highs at 151.90/95; resistance which, however, should logically provoke some selling.



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