Safe Haven and Risk Currencies Remain Bullish

The decline in EUR/CHF has escalated and we decided to open a sell signal, as safe havens remain in demand on financial uncertainties

Risk sentiment is off once again across all markets

The risk sentiment has made some huge shifts since early 2022, mostly based on the FED rate hike anticipations. The sentiment remained negative for most of last year as the FED kept raising rates pretty fast and USD/JPY surged above 152, but then we saw a reversal as the FED rhetoric softened on slowing global economy and inflation numbers.

The price fell below 128 in December but in January, the bullish momentum resumed again as the economic data showed improvement in the US economy and the FED picked up the hawkish rhetoric again. USD/JPY surged around 10 cents higher, reaching above 138, but the recent developments from last week have turned the sentiment negative and this pair has made another swift reversal, this time lower.

The start of the week was tumultuous for financial markets yesterday. Initially, investors were optimistic about the FED’s banking program to support deposits, but sentiment deteriorated later and the decline in the USD accelerated during the US session. However, as bottom-fishing began and some of the most heavily affected banks rebounded, the situation stabilized toward the end of the day.

EUR/CHF H1 Chart – MAs Have Turned into Resistance Now

We decided to sell the retrace higher last night

In forex, the price action was a bit more straightforward, as analysts priced in a less-aggressive FED. For next week’s meeting, the market is split between a standstill and 0.25% rate hike. For the year-end, the terminal rate is now lower at 3.85% (current rate is 4.50-4.75%). Now safe havens such as the JPY and the CHF have turned bullish, with EUR/CHF falling from 1.0050 to 0.97 lows.

Although, we saw a retrace higher toward the moving averages on the H1 chart last evening, where we decided to take a shot on the short side and open a sell EUR/CHF signal. The stochastic indicator was becoming overbought so the retrace seemed complete and moving averages were standing ready to provide resistance above, so we sold this pair. On the other hand, risk currencies such as AUD/USD and NZD/USD are also showing bullish pressure, although that’s coming more from the USD side.

EUR/CHF Live Chart

EUR/CHF
ABOUT THE AUTHOR See More
Skerdian Meta
Lead Analyst
Skerdian Meta Lead Analyst. Skerdian is a professional Forex trader and a market analyst. He has been actively engaged in market analysis for the past 11 years. Before becoming our head analyst, Skerdian served as a trader and market analyst in Saxo Bank's local branch, Aksioner. Skerdian specialized in experimenting with developing models and hands-on trading. Skerdian has a masters degree in finance and investment.

Related Articles

Comments

0 0 votes
Article Rating
Subscribe
Notify of
0 Comments
Oldest
Newest Most Voted
Inline Feedbacks
View all comments

HFM

Doo Prime

XM

Best Forex Brokers