A Brief Look At Binary USD/CHF

[Louise]

Last week was pretty volatile for the currency pair, as analysts were expecting the Federal Reserve to announce a new wave of quantitative easing in its meeting, scheduled for Thursday. The U.S. currency lost ground against all its major counterparts as market participants saw the potential extension of the Fed’s bond-buying program to have a dilutive effect on the greenback. The USDCHF dropped steadily all week long, starting at 0.9445 and finishing it close to the lows. On Monday the currency pair was struggling for quite some time with the support at the 0.945 level and after several failed attempts at breaking it the bears finally gave in and the bulls returned to the market, closing the Franc slightly higher, at 0.9463. On Tuesday, however, the support finally gave in and the USDCHF dropped sharply, touching lows of 0.99373 for the session before bouncing back up and finishing at 0.9389. The Wednesday session was rather quiet right until the last couple of trading hours as traders were preparing for the Federal Reserve meeting on Thursday and for the Swiss National Bank monetary policy assessment. Towards the end of the day market participants grew increasingly confident that the Federal Reserve will be forced to intervene in the markets as the unexpected increase in oil inventories indicated that the production in U.S. is slowing. On Thursday the selling intensified as the U.S. central bank surprised investors by announcing a much more aggressive bond-buying program than the one market participants were expecting. The Fed vowed to buy $40 billion worth of mortgage backed securities and long-term government bonds for as long as needed for the labor market to start recovering. At the same time the Swiss National Bank decided to leave its key interest rate at its record low of <0.25%. The USDCHF declined sharply on the news, finishing the session at 0.935, just a whisker above the lows for the day. On Friday the investors continued to shed their holdings in the dollar sending it to new lows against the Franc. The currency pair moved to its lowest level since mid-May despite the better-than-expected numbers, coming for the U.S. economy. Around noon we touched the lowest rate for the session – 0.9229 and in the afternoon the volatility slowly died as traders resorted to profit-taking activities ahead of the weekend. The currency pair finished the week not far away from the lows, slightly above the 0.925 level – at 0.9255. This week the USDCHF is trading in a very tight range around the lows it touched last week as investors prefer to refrain from further selling of the dollar since the greenback starts to look oversold against almost all its major counterparts. Moreover, the week is relatively quiet in terms of economic news, which is also affecting the trading volumes. Today we had the ZEW Economic Expectations number released for the Swiss economy, which indicated that the sentiment among investors took another hit in September. The news, however, had little impact on the USDCHF, which continued to move sideways. Tomorrow we have the trade balance figures being announced for the Swiss economy with investors expecting the surplus on the current account to have shrunk to 2.45B in August from a reading of 2.92B in July. Although the number is usually closely monitored, there are other news that will be drawing the attention of the market participants such as the unemployment claims and the Philly Fed manufacturing index for the U.S. economy and the bond auction in Spain.

Technically speaking, the support in the USD/CHF seems to be forming around the 0.925 level, while resistance is standing at the 0.93 level. Oscillators are all trending higher with the relative strength index at 44 and the stochastic at 59. The MACD bounced from the lows it touched at the end of last week and is currently issuing buy signals, but it is still way below the key 0 level.

Source: binaryoption