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The Swiss Franc
By: Adi Pangestu
The SNB has been struggling to suppress the strengthening of the CHF, which continues to weigh on inflation expectations. It remains very strong against the Euro; although EURUSD has experienced a strong rebound since March, EURCHF has only increased slightly and is still trading at low levels relative to its historical range. The strengthening of the Swiss franc is not helping to raise inflation in Switzerland. Hence there is a small possibility that the SNB will allow the Swiss franc to appreciate in the near to medium term and will probably try to intervene at some point to offset the USD.
In addition, the USDCHF exchange rate is still at very low levels, as it has been for the past two decades, not rising above its historical 1.8309 high in the last 50 years.
USD looks to have found its lowest point last week and now has the opportunity for a bullish retracement in a small period. Meanwhile, the current CHF is still very strong against the USD and EUR. In the last two weeks, we have witnessed the US Dollar consolidating at its lowest point, after the last few months of weakening.
We have 2 lows on the left, 2 lows turning into a double bottom and 1 rising low (HL) on the right. The bias remains neutral in space for consolidation. However, a break of the resistance level will temporarily turn the bias to the upside. MACD is still in the buy zone, with the histogram bar decreasing.
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