Swiss Franc: USD/CHF Makes A Break to the Upside

USD/CHF was sliding lower last week after making a positive turnaround at the start of 2023, but buyers are in charge again and it seems like we’re witnessing a bullish breakout. The price has broken above the 50 daily SMA which acted as resistance before, opening the door for further gains, however, one last obstacle stands in the way.

USD/CHF Technical Analysis – Breaking Above the 50 Daily SMA

USD/CHF daily chart pointing up

This forex pair has gained around 300 pips since the bullish reversal more than a month ago, with the FED not sounding as dovish as it did a month ago. Initially, the price ran into the 20 SMA (gray) on the daily chart, which acted as resistance, rejecting the price, but USD/CHF buyers had enough fuel to push above this moving average.

After that they ran into the next moving average, the 50 SMA (yellow) which also rejected the price initially, sending it 170 pips lower. But buyers regrouped again and yesterday they sent the price above this moving average as well. But, the surge stopped just below January’s high, which comes at 0.8720s, so buyers will have to push above this level before heading for 0.90.

USD/CHF Fundamental Analysis – Both Sides Support Buyers

The US CPI inflation report released two weeks ago came above expectations, while last week we saw two great jobs reports, the JOLTS job openings and the NFP employment, which gave the USD a considerable boost against its counterparts. In such context of the larger economic environment, traders’ expectations about the Federal Reserve’s monetary policy have eased, as FOMC members keep pointing to May for the first rate cut, instead of March.

On the other hand, the Swiss National Bank is looking pleased with the rate at which the CHF and inflation are declining. Thomas Jordan, Chairman of the SNB tilted to the dovish side in his last appearance putting the Franc under selling pressure as the SNB highlighted the risks posed by the CHF’s increase. So, we remain bullish on this pair and are looking for a retrace to get long.

USD/CHF Live Chart