Par Value Back In Play For The USD/CHF

The past nine sessions have brought windfall profits to those traders long the USD/CHF. Rates have rallied from sub-.9600 to the vicinity of par value, a move of nearly 400 pips. Since the low of .9542 posted on September 21st, the bulls have completely dominated this market.

From a fundamental standpoint, several factors have prompted the rally. An openly hawkish U.S. FED, signing of the U.S. Mexico Canada Agreement (USMCA), and fresh worries over the Brexit transition are the most powerful. As of now, these geopolitical events continue to drive the USD north vs the Swiss Franc.

USD/CHF Technical Outlook

Safe-haven assets have been on the ropes against the Greenback since mid-September. Gains against the Japanese yen and a stagnate gold market accentuate this point. The rally in the USD/CHF is yet another example.

There are two areas of topside resistance that have my immediate attention:

• Resistance(1): Value Area, .9925-50
• Resistance(2): Psyche Level, 1.0000 (not pictured)

Overview: Wednesday’s bullish breakout has taken the Swissie to the doorstep of par value. Today’s action has been muted in comparison, posting a modest 35 pip range. Is a test of par in the near future?

Perhaps. I expect the value area established in August (.9925-50) to put up a bit of fight before we break toward 1.0000. Prolonged consolidation at this level will come as no surprise and appears to be setting up.

However, the next 24 hours are going to be big for the USD/CHF. The Swiss CPI is due out tonight and U.S. NonFarm Payrolls are to be released bright and early tomorrow. Participation will be heavy and we may be in for a test of par by Friday’s closing bell.