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Talking Points:
- USD/CHF Technical Strategy: Flat
- US Dollar Aims Near 0.98 vs. Franc Following Resistance Break
- Passing on Long Position on Threat of Erratic SNB Policy Moves
The US Dollar looks poised to resume its advance against the Swiss Franc, with prices aiming to challenge resistance just below the 0.98 figure. The pair launched an impressive recovery from trend line support established in early May last week but upside momentum stalled just shy of the 0.97 mark. The subsequent consolidation range now appears to have given way to a renewed upside push.
The next topside inflection point comes in at 0.9771, the 61.8% Fibonacci expansion. A break above that on a daily closing basis exposes the 76.4% level at 0.9892. Alternatively, a reversal back below the 50% Fib at 0.9673 – now recast as support – opens the door for a challenge of the 38.2% expansion at 0.9574.
Furthermore, we remain leery of taking on CHF-linked exposure considering recently erratic SNB behavior, particularly amid speculation that the ECB may expand its monetary stimulus effort. Indeed, it was the onset of ECB QE that pushed the SNB to unceremoniously abandon its EURCHF floor at 1.20, with now-infamous consequences. As such, we will remain on the sidelines.
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