The USDCHF pair recovered slightly this Monday following comments from the Swiss National Bank’s Chairman, Thomas Jordan.
Jordan has, in the last month, talked up intervention as a tool for the SNB to control the strength of the Swiss Franc, which continues to see safe-haven demand as a result of the rising coronavirus cases in the US and Europe. He was back in the news this Monday for the same reasons, as indicated in a Reuters report.
The SNB Chief said that though banks had been able to weather the effects of the coronavirus pandemic, “…an overvalued Swiss franc can pose a problem for the financial industry too.” He further added that negative interest rates and willingness to intervene in the forex market would allow the Swiss National Bank (SNB) to counter the attraction towards Swiss franc investments.
As expected, the Franc was put on offer by these statements, allowing the USDCHF to record a modest 0.37% gain.
Technical Outlook for USDCHF
The 4-hour chart of the USDCHF reveals a double bottom pattern, with price now testing the 0.90809 resistance. This resistance constitutes the pattern’s neckline.
A break above this level, which is also the site of the daily pivot, targets the 0.91361 resistance. This target is the expected price projection that corresponds to the pattern’s measured move from the bottoms to the neckline. Extension of this advance brings in 0.91533 as the next upside target.
On the flip side, a rejection at the neckline allows for a pullback towards 0.90629. We may see a further decline towards 0.90351, the site of the troughs that constitute the double bottom if the retreat continues. At this new support target, the price may have a chance to repeat its quest to break the neckline, thus forming a triple bottom. The other side of the coin may be that the Swiss Franc continues to strengthen, pushing below 0.90351 and targeting 0.89953.
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USDCHF 4-Hour Chart
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