USD/CHF Forecast December 13, 2011, Technical Analysis

The USD/CHF pair skyrocketed through the 0.93 level on Monday as the “risk off” trade crushed the Euro, and caused a run to the Dollar. The Swiss National Bank is willing to fight Franc appreciation, and the USD is the “safety play”. The rising of this pair has made sense for quite some time, and the market continues to look healthy for this pair. In fact, we feel that the 0.95 level is the next target, and if we get above that – we are going to parity. A severe crisis in Europe would push the market to that parity level rather quickly as Switzerland would certainly be hurt by massive problems in its largest export market.

The breakout is significant as the level has been tested over and over. The 0.93 level could be thought of as a potential floor now if this breakout is to be believed. The continued concerns of the markets in general will continue to price a bid for the US Dollar, and the Swiss franc, although a traditional safe haven, cannot be bought as long as the SNB is actively working against it.

The talk of a potential higher “floor” in the EUR/CHF continues to pressure the value of the Franc as well, and this could have an impact on all XXX/CHF related pairs. Almost all of them will move in concert and a sudden spike in that pair will certainly move this one. The pair continues to be a buy above the 0.9000 level, and we will be buying dips as long as that area holds true. The recent action around 0.9250 suggests that the support could be continuing and even more impressive as it is so close to the recent resistance area.

Until the EU gets a handle on the problems, a country like Switzerland will continue to hurt as the export market is so big for them. The Europeans are certainly going into recession and something worse than that hasn’t exactly been ruled out at this point. With that in mind, we feel this pair is a nice long-term buy and hold proposition.

USD/CHF Forecast December 13, 2011, Technical Analysis

Written by FX Empire