USD/CHF Forecast Today 07/01: Holds Crucial Support (Chart)

2025-01-07 02:50:14

(MENAFN- Daily Forex)

During my daily analysis of the major currency pairs, the USD/CHF pair has captured my attention as we have seen quite a bit of volatility.
What has captured my attention more than anything else is that it appears that the 0.90 level has offered a certain amount of support.
Whether or not it holds remains to be seen, but this looks like a market that is essentially being“held under water.”

Swiss National Bank

The biggest driver of this USD/CHF pair at the moment I believe is the Swiss National Bank, as it recently cut interest rates by 50 basis points, when it was expected to do 25 basis points in cuts. This suggests that perhaps the Swiss are very nervous about what they are seeing around the world, and perhaps more specifically than that, the European Union. Remember, 85% of Switzerland's exports go into the European Union, so unfortunately for the Swiss, they are very much in bed with the Europeans as far as how the economy goes.

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Interest rate differentials continue to favor the United States, despite the fact that we did see interest rates drop a bit during the Monday session. In other words, you get paid to hang on to this pair, despite the fact that a lot of people look at the Swiss franc as a bit of a“safety currency.” While that is true, the reality is that the US dollar is also another safety currency, so that aspect of trading gets muted a bit here in this general vicinity.

If we were to break higher and clear the recent high from the last couple of days ago, then I think we are going to make a move for a much bigger trade, perhaps all the way up to parity, but it will obviously take a certain amount of time to get there. Keep in mind that this pair is typically a bit slower than others, so that definitely would be a long-term move.

EURUSD Chart by TradingView

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