Long-Term Fibonacci Support In View For The USD/CHF
Shain Vernier • 2 min read
The USD/CHF has been on a bearish tear this week, plunging 1.71% in a little over four sessions. One of the key drivers of this move has been fresh COVID-19 uncertainty stemming from new European lockdowns. As of this writing, France, the U.K., Germany, and Italy all have lockdowns in place; most of which are to last until late April. Unfortunately, it looks like the “4th wave” of COVID-19 infections has driven forex players back into the safe havens.
In addition to the action in the Swissy, the USD/JPY (-0.92%) and XAU/USD (+0.93%) both moved against the Greenback this week. For American traders, the short-term run to safe-havens has been muted. The CBOE Volatility Index (VIX), known as Wall Street’s “fear gauge,” is in the neighborhood of 17.00, just off 52-week lows. So, the sudden run to safe-havens is not all-inclusive. This sentiment is reinforced by the U.S. equities markets, with the DJIA DOW (+102), S&P 500 SPX (+9), and NASDAQ (+1) all trading near record highs.
On the traditional economic news front, there weren’t a whole lot of numbers out this morning. However, Core PPI figures for March came in above projections on both the monthly and yearly scale. Here’s a look at the data set:
Event Actual Projected Previous
Core PPI (March, MoM) 0.7% 0.2% 0.2%
Core PPI (March, YoY) 3.1% 2.7% 2.5%
Judging by these figures, inflation is on its way up in the United States. Maybe the Fed will acknowledge this fact at their 28 April meeting. Then again, maybe they won’t.
For the USD/CHF, rates are holding just above the 0.9250 handle. Let’s dig into the weekly technicals and check out that key Fibonacci support level.
USD/CHF Drives At 0.9200
This week’s selloff in the USD/CHF is the largest since last November amid the uncertainty of Election 2020. Subsequently, the large move has brought long-term downside support into play.
For the near future, there is one level on my radar:
- Support(1): 38% Fibonacci Retracement, 0.9198
Bottom Line: Although the long-term fundamentals toward the Greenback are bearish, it’s still wise to respect 2021’s uptrend. Until elected, I’ll have buy orders in the queue from 0.9209. With an initial stop loss at 0.9119, this trade produces 90 pips on a standard 1:1 risk vs reward ratio.