- During the chaos on Thursday, we have seen the Swiss franc pick up almost 4% against the US dollar, as we have sliced through the 0.85 level, followed by the 0.84 level.
- By doing so, this suggests that the market is in fact going to continue to see traders run to the Swiss franc in order to find a bit of safety.
- That being said, you have to be very careful with the Swiss franc, because the Swiss National Bank has a long history of getting involved in the markets when they see something they don’t like.
Technical Analysis
There is absolutely nothing on this chart that looks good to the upside, and the size of the candlestick on Thursday almost certainly suggests that we will have further downward pressure. A lot of things just broke, and it does make a certain amount of sense that the Swiss franc would be a beneficiary of this price action, due to the fact that there is so much chaos and of course it is considered to be a massive safety currency. Ultimately, this is a market that I think given enough time will continue to the downside and rallies will probably be sold into, at least until we get some type of clarity going forward. As things stand right now, we don’t have a lot of clarity when it comes to global trade, and therefore I think the chaos will only continue.
I would be watching the 0.85 level for potential shorts, on signs of exhaustion. You might even see the 0.84 level offer that as well. It is probably only a matter of time before we get down to the 0.80 level, which could very well send alarm bells ringing in Zürich, as the Swiss National Bank might be forced to intervene due to the fact that the Swiss franc might get too strong, and it may hurt exports. While it’s not necessarily the USD/CHF pair they pay attention to, don’t forget that they have to conduct business internationally in US dollars.
