There’s Life in Safe Havens as Yen, CHF to USD Rate Fluctuate
Safe havens are showing some life amid quiet markets, with the JPY diving 3 cents, while the CHF to USD rate lost 60 pips. Not much is expected in the hours ahead, as the economic calendar is empty, but we decided to take a short o USD/CHF, selling the slight rebound in this pair, with the USD looking pretty weak again.
USD/CHF Chart Daily – Reversing Lower After Failing at the 20 SMA
In the first four months of 2024, USD/CHF experienced a strong upward trend, gaining about 8 cents due to the weakening of the Swiss franc following two consecutive rate cuts by the Swiss National Bank (SNB). However, since May, the pair has been on a downward trajectory, with the decline accelerating through July and early August.
This drop was largely driven by a series of disappointing US economic data releases, a reduction in risk appetite, and the CHF’s strength as a safe-haven currency, which pushed the US dollar down and the pair to lows of 0.84. After reaching a low of 0.8432 in the first week of August, USD/CHF attempted to recover, but the climb was halted at 0.8748 by the 20 SMA on Thursday. Sellers have since regained control, reinforcing our decision to issue a USD/CHF sell signal.
Slower Price Action Amid Ongoing USD Selling
The market session today was notably slower, as the turbulence from last week subsided. Despite this, the selling of the USD continues, albeit at a slower pace, and lower bond yields remain a contributing factor. The economic calendar is relatively light today and won’t pick up significantly until Thursday, which may lead to a more subdued market mood this week.
Safe Haven Currencies Show Life
Safe haven currencies have seen some movement, with USD/CHF dropping 50 points and currently down 0.2%, hovering around the 0.8650s. This coincided with the decision to open a sell signal on USD/CHF. Meanwhile, USD/JPY experienced a sharp decline in the Asian session, falling nearly 3 cents to 145.18 before recovering slightly to around 146.00, still down 1% for the day.
In the broader picture, USD/CHF’s 2024 low of 0.8430s is considered the first leg of a medium-term corrective pattern from its decline above 0.92, while a break below the 2023 low around 0.8330 will be the second leg. That could signal the continuation of the larger downward trend that began above 1.01, while resistance remains strong in the 0.9240s.
USD/CHF Live Chart
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