Plunges towards 0.9700 accumulating 300 pips of losses after reaching parity

  • Since Tuesday, USD/CHF has crashed over 300 pips, and is down 1.69% on Thursday.
  • The US dollar index has so far fallen 1.68% over the week, weighed down by falling US bond yields.
  • USD/CHF Price Prediction: Plunging towards the 50-DMA before resuming the bullish bias.

USD/CHF plunges 100 pips and falls for the third consecutive trading day and is trading below the 20-day moving average (DMA) and 300 pips below the parity reached on May 12. At 0.9705, USD/CHF mirrors the aforementioned, mainly driven by US Dollar weakness and falling US Treasury yields.

Investor sentiment remains negative. U.S. stocks are starting to prepare for the New York close, and although they are down less than 1%, they are expected to end Thursday’s session with losses, with the exception of the Nasdaq 100. China remain a concern for market participants as domestic Covid -19 outbreaks in other provinces threaten to trigger restrictions again.

The US Dollar Index, a gauge of the greenback’s value against a basket of six peers, fell more than 1% to 102.701, a headwind for the major. Additionally, US Treasury yields extend their slide for the second consecutive session, losing three and a half basis points to 2.853%.

Meanwhile, Swiss National Bank (SNB) President Thomas Jordan said on Thursday that the central bank was not “hostage” to other central banks and stressed that the bank had a “monetary policy autonomous centered on price stability”. Additionally, Jordan said that “we remain ready to intervene in the currency markets if necessary” and reiterated the need for a dovish stance.

USD/CHF Price Prediction: Technical Outlook

The USD/CHF daily chart depicts the pair as biased higher, despite the major falling below the 20-DMA at 0.9816. The DMAs of the daily moving averages, located below the exchange rate, support the previously mentioned elements. However, the Relative Strength Index (RSI) at 47.20 is in bearish territory, and the speed of the downward move may find support around the 0.9530 area, where the 50-DMA is located.

That said, the first USD/CHF support would be at 0.9700. A break of the latter would expose June 5, 2020, the highest daily support at 0.9652, followed by the figure at 0.9600 and the aforementioned 50-DMA at around 0.9536.

Key technical levels

Richard L. Militello