USD/CHF eyes parity as dollar resumes higher
Fawad Razaqzada September 11, 2019 12:56 PM
As a result of the dollar rally, the USD/CHF looks poised for a bullish breakout.
The Dollar Index has resumed higher today, with the greenback rising most notably against the euro ahead of the European Central Bank meeting tomorrow. The likes of the USD/JPY and USD/CHF have also started the day on the front foot, with haven currencies falling out of favour amid a risk-on day in the stock markets after China released a tariff exemptions list for products from the US this morning, in a further sign of de-escalation in the dispute.
With the dollar appreciating, the pressure is growing on the Fed to cut interest rates more aggressively, not least from President Donald Trump who was at it again today. He tweeted that the Fed “should get our interest rates down to ZERO, or less, and we should then start to refinance our debt. INTEREST COST COULD BE BROUGHT WAY DOWN, while at the same time substantially lengthening the term… It is only the naïveté of Jay Powell and the Federal Reserve that doesn’t allow us to do what other countries are already doing…”
Tomorrow, the European Central Bank is widely expected to cut interest rates slightly, while the Federal Reserve is seen delivering a 25 basis-point rate cut next week.As a result of the dollar rally, the USD/CHF looks poised for a bullish breakout. Rates have been printing higher highs and higher lows since that false breakdown attempt was made in mid-August around the 0.9700 handle. Nearly a month later, the Swissy has already broken its bearish trend line and at the time of writing it was trying to re-capture the 200-day average around 0.9950. Unless a bearish reversal pattern unexpectedly forms here, it looks like the USD/CHF may drift higher over the coming days and head towards and potentially beyond parity.
Source: eSignal and FOREX.com
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.