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SNB opens the day, followed by the BOE and the ECB

USD/CHF Holding Firm Above 0.9100

Posted Tuesday, November 17, 2020 by
Shain Vernier • 2 min read

The Greenback is once again showing weakness as U.S. equities trade near all-time highs. Losses vs the euro, pound sterling, and Japanese yen have paced today’s forex action. For the USD/CHF, rates are holding just above the 0.9100 handle and sentiment is bearish.

Earlier today, U.S. FED Chairman Jerome Powell spoke at the Bay Area Council Business Hall of Fame event. Powell’s talking points were the same as they have been for months. COVID-19 uncertainty remains, the economic recovery is “uneven,” and downside risks are evident. 

All in all, Powell’s comments have already been priced into the majors. According to the CME FedWatch Index, the federal funds rate is projected to stay at 0.0-0.25% until at least September of 2021. As 2020 rolls toward its conclusion, it looks like unlimited FED QE and rock bottom interest rates are the new norm. This isn’t good for any USD long-term outlook, which has been in a stubborn downtrend since the onslaught of COVID-19 last March.

On a side note, this morning brought the release of the NAHB Housing Market Index (Nov.). The metric came in at 90, well above the previous release and projections of 85. If nothing else, U.S. homebuilders are optimistic over the availability of cheap construction loans and a robust consumer market.

Let’s check out the USD/CHF technical outlook and see where this market may be heading.

USD/CHF Extends Daily Losing Streak

Since 11 November, it has been all downhill for the USD/CHF. Rates are off about 100 pips since amid a four-session losing streak.

USD/CHF, Daily Chart
USD/CHF, Daily Chart

Here are the key levels to watch in this market for the near future:

  • Resistance(1): Bollinger MP, 0.9110
  • Support(1): 62% Current Wave Retracement, 0.9060

Bottom Line: The remainder of the week is relatively quiet on the U.S. economic calendar. If the Greenback continues to lag, a buying opportunity may come into play for the USD/CHF.

Until elected, I’ll have buy orders in the queue from 0.9066 in the USD/CHF. With an initial stop loss at 0.9041, this trade produces 25 pips on a standard 1:1 risk vs reward ratio.

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