Scope for Further Downside on USD/CHF
Matt Simpson December 10, 2019 8:53 PM
USD/CHF rests on key support ahead of today’s FOC meeting. Yet once we get past the noise, we could see support give way.
In an earlier report we flagged that USD/CHF had struggled to close above parity since May, and that we were watching for its potential to roll over back within range. Whilst it teased us near the end of November with an intraday run for the October high, the upside was short live before it keeled over. Therefore, the record stands: the Swissy has not closed above parity since May. Moreover, it appears further downside could materialise.
We know that seasonally, December tends to be a bearish month for USD/CHF. And as its fallen -1.9% since the hammer high late November, it certainly on track to follow this seasonal pattern. But we also note that sight deposits have been falling in recent weeks which can indicate SNB have been less inclined to intervene and weaken their currency, effectively giving traders a free pass at shorting other currencies against it. So, as we’re in a typically bearish month for USD/CHF, SNB appear less inclined to weaken the franc and the technicals appear bearish, perhaps short USD/CHF remains a contender.
Momentum since the hammer has been decisively bearish, and a minor last week places a lower high at 0.9918. Prices are consolidating in a narrow range at key support, although that’s to be expected ahead of an FOMC meeting. Given the clear momentum shift from parity, the path of least resistance points lower.
- Bias remains bearish below 0.9918
- Keep today’s FOMC meeting on your radar as USD could rebound if the Fed are neutral (or simply not dovish). Although we suspect this will be short lived against CHF anyway, so may provide an opportunity to fade whilst it remains below 0.9918.
- Interim target is 0.9798, follows by 0.78 and 0.9715
Disclaimer: The information on this web site is not targeted at the general public of any particular country. It is not intended for distribution to residents in any country where such distribution or use would contravene any local law or regulatory requirement. The information and opinions in this report are for general information use only and are not intended as an offer or solicitation with respect to the purchase or sale of any currency or CFD contract. All opinions and information contained in this report are subject to change without notice. This report has been prepared without regard to the specific investment objectives, financial situation and needs of any particular recipient. Any references to historical price movements or levels is informational based on our analysis and we do not represent or warranty that any such movements or levels are likely to reoccur in the future. While the information contained herein was obtained from sources believed to be reliable, author does not guarantee its accuracy or completeness, nor does author assume any liability for any direct, indirect or consequential loss that may result from the reliance by any person upon any such information or opinions.
Futures, Options on Futures, Foreign Exchange and other leveraged products involves significant risk of loss and is not suitable for all investors. Losses can exceed your deposits. Increasing leverage increases risk. Spot Gold and Silver contracts are not subject to regulation under the U.S. Commodity Exchange Act. Contracts for Difference (CFDs) are not available for US residents. Before deciding to trade forex and commodity futures, you should carefully consider your financial objectives, level of experience and risk appetite. Any opinions, news, research, analyses, prices or other information contained herein is intended as general information about the subject matter covered and is provided with the understanding that we do not provide any investment, legal, or tax advice. You should consult with appropriate counsel or other advisors on all investment, legal, or tax matters. References to Forex.com or GAIN Capital refer to GAIN Capital Holdings Inc. and its subsidiaries. Please read Characteristics and Risks of Standardized Options.