The USD/CHF and EUR/CHF exchange rate continued rising this week after hawkish statements by Federal Reserve and European Central Bank (ECB) officials. The Swiss franc retreated to 0.9450 against the euro and to 0.8700 against the US dollar.
Hawkish ECB and Fed officialsThe World Economic Forum (WEF) was the biggest macro event this week as it gathered policymakers from around the world. These people included officials from the ECB, Federal Reserve, and the Swiss National Bank (SNB).
Most of these officials expressed concern that the market was expecting rate cuts sooner enough. ECB officials, including Christine Lagarde, noted that the bank will likely start cutting interest rates in the second half of the year. Some analysts were expecting these cuts to start as soon as in March.
Some Federal Reserve officials like Christopher Waller and Raphael Bostic warned that inflation was still stubbornly high and that the Fed will likely hold rates higher for longer to counter it.
Meanwhile, in an interview, SNB’s Thomas Jordan said that inflation in the country was retreating, helped by the strong Swiss franc. He expects to hold rates higher for longer even though analysts see them coming as soon as in March.
Meanwhile, the EUR/CHF and USD/CHF pair rose as investors downplayed the impact of the ongoing tensions in the Middle East. Pakistan bombed Iran on Thursday, which was an escalation. The US and the UK have also continued to bomb Houthi rebels.
While the crisis could go on for long, there are signs that the market is downplaying its significance. For example, the price of Brent and West Texas Intermediate has remained below $80. In most cases, the Swiss franc tends to do well when there are geopolitical issues.
Watch here: https://www.youtube.com/embed/BjBl6EX9BfI?feature=oembedUSD/CHF technical analysis
Turning to the daily chart, we see that the USD to CHF exchange rate has been in a strong upward trend in the past few days. In this, it has jumped in the past seven straight days and moved to its highest point since December 18th. The pair has also flipped the important resistance level at 0.8551 into support,
It has risen above the 50-day moving average and the key resistance at 0.8670, the lowest swing on December 4th. Meanwhile, the Relative Strength Index (RSI) is approaching the overbought point at 70 while the Chande Momentum Oscillator (CMO) is nearing 100.
Therefore, the pair will likely continue rising briefly and then it will resume the downtrend and retest the support at 0.8550.
EUR/CHF technical analysis
The EUR to CHF pair continued bouncing back in the past few days. On the daily chart, the pair moved above the 50-day moving average. Like the USD/CHF pair RSI and the CMO indicators have continued rising.
At the same time, the pair is nearing the upper side of the descending channel shown in purple. Therefore, the pair will likely continue rising as buyers target the key resistance at 0.9500. This price is along the upper side of the descending channel.
The post Here’s why the EUR/CHF and USD/CHF rates are rising appeared first on Invezz
