Since reversing from the lows around 0.8550s in July, USD/CHF has been on a bullish trend, which lasted until early this month. This rebound has been fueled in large part by a bullish surge in US Treasury rates, which has kept the USD in demand although we have seen a retreat in the last week as the tensions in the Middle East are keeping safe havens such as US bonds in demand, while yields have retreated to some degree.
Since July, buyers were in complete control, driving the price above 0.90 and then above 0.92, but then the uncertainty hit the sentiment and risk assets tumbled, while safe havens surged, hence the retreat in this forex pair to the zone surrounding the major level at 0.90.
Moving averages were acting as support indicators on bigger period charts such as the 50 SMA (yellow) above, keeping USD/CHF supported during pullbacks like this one, which has been going on for almost a week. The price reversed a week ago, and USD/CHF closed the week in the 0.9015 region, returning to this zone for the second time in a few days.
The Swiss National Bank maintained interest rates at 1.75% against expectations of 25 bps hike to 2.00%, as the central bank saw recent tightening as cooling off inflationary pressures. The CPI consumer inflation data in Switzerland revealed that inflation is well within the SNB’s 0-2% target area for both the headline and core measures. Manufacturing PMI witnessed a decent rebound, but it continues to remain in contraction.
So, fundamentals and techincals point higher for this pair, since the 200 SM (purple) seems to be holding as support for now. We saw a 100 pip bounce the last time the price met the 200 SMA and this time looks like we’re gonna see another rebound. So we decided to go long on this pair and opened a long term buy USD/CHF signal on Friday, hoping that the situation in Gaza will calm down.