Market News & Analysis


Top Story

If Central Banks are Cutting Rates, Someone Forgot to Tell USD/CHF

With the coronavirus running amuck causing fears of a stalled world economy for Q1 and possibly even Q2, there has been talk of possible rate cuts by Central Banks around the globe, including the Federal Reserve.  Although many have questioned how this will help people get back on planes and cruise ships, stock markets are taking this as a positive signal.  Over the last 10 years or so, bad news is good, as the Fed has been there as a backstop to falling stock markets.  As a result, US stock markets have opened the week in positive territory.

If talk of central banks cutting rates is positive, someone forgot to tell USD/CHF, as the fight to safety still seems to be in full effect.  Granted, Manufacturing PMI for Feb from Switzerland did come out to better at 49.5 vs 48.1 expected and 47.8 last, however the PMIs are not the driver of markets these days.  The Swiss Frac has always been a flight to safety currency and as a result, it is still going bid (USD/CHF lower)!

On a daily timeframe, USD/CHF moved lower in December to the target of the double top near .9662.   Price then before traded sideways through January,   before bouncing to the resistance and the neckline of the double top and the 200 Day Moving Average near .9850.  As stocks sold off in mid-February, so did USD/CHF, as traders sought to move out of stocks in into the Swiss Frac.  The pair currently is trading near horizontal support at .9550, which is the September 18th  , 2019 lows.  Bulls may be looking to buy near here, with stops below the September lows.

Source: Tradingview, City Index

On a 240-minute timeframe, the lows also coincide with the 127.2% extension from the low in early February to the highs at .9850.  The RSI is diverging slightly,  which may allow the pair stay around here as the RSI winds.  Horizontal resistance near .9615/30.  Bears will look to sell bounce near this level.  Support is at the 161.8% Fibonacci extension from the same time period, near .9430,  which is also within a band of support on the daily timeframe.

Source: Tradingview, City Index

Whether or not central banks decide to cut rates in response to a slowdown from the coronavirus, it still seems as if not all market participants think it will help.  We are still seeing the flight to safety trade in USD/CHF.


From time to time, GAIN Capital Australia Pty Ltd (“we”, “our”) website may contain links to other sites and/or resources provided by third parties. These links and/or resources are provided for your information only and we have no control over the contents of those materials, and in no way endorse their content. Any analysis, opinion, commentary or research-based material on our website is for information and educational purposes only and is not, in any circumstances, intended to be an offer, recommendation or solicitation to buy or sell. You should always seek independent advice as to your suitability to speculate in any related markets and your ability to assume the associated risks, if you are at all unsure. No representation or warranty is made, express or implied, that the materials on our website are complete or accurate. We are not under any obligation to update any such material.

As such, we (and/or our associated companies) will not be responsible or liable for any loss or damage incurred by you or any third party arising out of, or in connection with, any use of the information on our website (other than with regards to any duty or liability that we are unable to limit or exclude by law or under the applicable regulatory system) and any such liability is hereby expressly disclaimed.