Major Test at the 50 SMA for USD/CHF As the Safe Haven Trade Retreats
USD/CHF has been bullish since reversing from the lows around 0.8550s in July which lasted till early this month, when the price reversed down at around 09250. This resurgence has been powered in large part by a positive increase in US Treasury rates, which has kept the USD in demand, albeit we have seen a reversal in the last week as Middle East tensions have kept safe havens like US Treasuries in demand, although yields have fallen to some extent.
Buyers pushed the price over 0.90 and then above 0.92, but uncertainty such as the conflict inthe Middle East has affected mood negatively and risk assets have fallen while safe havens have risen, resulting in a pullback in this currency pair to the zone surrounding the significant level at 0.90 first and then to 0.89.
Moving averages were functioning as support indicators on the H4 chart such as the 50 SMA (yellow) and the 100 SMA (green) above, keeping USD/CHF sustained during pullbacks. But since the bearish reversal several weeks ago, moving averages have turned into resistance. In the last two days we have seen some bullish momentum in this pair, which has sent it 70 pips higher after bouncing off the 100 SMA on the daily chart at around 0.89 earlier this week.
Yesterday we had the Credit Suisse investor sentiment indicator for October, which declined again, divin gdeeper in negative teritory. With the Eurozone econpmy heading into doldrums, the Swiss ecoomy won’t be too far behind considering how connected they are. On the Swiss franc front, investors are looking forward to the October ZEW Survey Expectations. In September, the sentiment index was -27.6. A further drop in the numbers would imply that business conditions, the labor market, and other factors have deteriorated more.
Report by Credit Suisse and CFA Society Switzerland – 25 October 2023
- October Credit Suisse investor sentiment -37.8 points vs -27.6 points prior
- September Credit Suisse investor sentiment -27.6 points
Swiss investor sentiment worsened to start Q4 with 92% of participants in the survey noting that they see no improvement to economic prospects over the next six months.
USD/CHF Live Chart
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