USD/CHF reverses sharply from 1.0000 and tumbles toward 0.9900
- Swiss franc soars on Monday amid risk aversion, gains particularly versus US dollar.
- USD/CHF suffers the worst slide in three months, losing more than 75 pips.
The USD/CHF pair reversed dramatically after posting on Friday the highest daily close since June. Last week it traded above the parity level and today tumbled to 0.9911, the lowest since November 21.
The return of the safe-havens
The move lower in USD/CHF took place amid increasing demand for safe-haven assets. The Swiss franc was the top performer among currencies. The initial optimism across markets driven by positive data from China and the Eurozone, changed after the announcement of US President Trump regarding tariffs and following US manufacturing data.
“US President is restoring tariffs on imports of steel and aluminum from Brazil and Argentina following accusations of intentionally devaluing their currencies to the detriment of US farmers. On the other hand, U.S. Commerce Secretary Wilbur Ross renewed the threat of higher tariffs on Chinese imports. Separately, China’s first retaliation to the U.S. bill supporting pro-democracy movements in Hong Kong was not related to trade, but officials said China would take further necessary actions without signaling what they might be”, explained BBVA analysts.
The combination of a weaker greenback across the board and a stronger Swiss Franc pushed USD/CHF sharply lower. The pair form support above 0.9900. It dropped back under the 20-day moving average (0.9940) toward 0.9900. The next support below 0.9900 might be seen at 0.9865 (mid-November low) and then comes the critical barrier around 0.9840 (mid-September & October low).
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