USD\/CHF has faced continued pressure, with the currency pair falling to around 0.7830 due to a weakened US Dollar. Despite robust US Q3 GDP data showing economic growth at an annualised rate of 4.3%, the US Dollar has underperformed against its peers.<\/p>\n
The US Dollar Index (DXY) remains near a three-month low, trading around 97.75. The Greenback’s weakness is partly due to expectations of further Federal Reserve interest rate cuts, as indicated in their recent monetary policy announcement.<\/p>\n
In this week’s currency performance, USD declined by 0.63% against major counterparts. It particularly underperformed against the New Zealand Dollar, which saw a 1.75% increase.<\/p>\n
Technical analysis shows the USD\/CHF is struggling below the 20-day Exponential Moving Average of 0.7966. The Swiss Franc outperfoms during a holiday-shortened week, maintaining higher trading levels.<\/p>\n
The 14-day Relative Strength Index, sitting at 31, signals weak momentum for USD\/CHF. A continued bearish trend could see the pair fall below 0.7830 if it closes below this level.<\/p>\n
The Federal Reserve’s monetary decisions play a key role in the USD’s valuation. Quantitative easing tends to weaken the US Dollar, while quantitative tightening generally strengthens it.<\/p>\n
With the USD\/CHF pair showing clear downward momentum, derivative traders should consider strategies that profit from a falling price. The market’s focus is on the Federal Reserve’s plan to cut interest rates next year, making bearish positions on the US Dollar attractive. This sentiment is strong enough to overshadow robust US economic growth figures.<\/p>\n
We see that the market is completely ignoring the strong 4.3% Q3 GDP data. This is because recent inflation numbers, which we saw slow to a 3.1% annual rate in November, give the Fed a clear path to begin easing policy. The central bank\u2019s own recent projections, signaling more than one rate cut, are the primary driver here.<\/p>\n
On the other side of the pair, the Swiss Franc benefits from a much healthier inflation picture. Switzerland’s latest consumer price index showed inflation at just 1.4%, significantly lower than in the United States. This reduces the pressure on the Swiss National Bank to cut its own rates, adding to the Franc’s relative strength.<\/p>\n
For traders expecting the pair to test the 0.7830 support level, buying put options with strike prices around 0.7850 or below offers a defined-risk strategy. This approach allows traders to capitalize on the downward slide in the coming weeks. The weak momentum, confirmed by the RSI reading near 31, supports this bearish outlook.<\/p>\n
Another approach involves selling call option spreads with a ceiling near the 20-day moving average of 0.7966. This strategy is for those who believe the pair will not only fall but also fail to rally significantly during this period of thin holiday trading. It allows a trader to collect premium from the expectation that the pair’s upside is capped.<\/p>\n
We should remember the sharp decline we witnessed in late 2023, when a similar dovish pivot from the Fed caused a rapid drop in this pair. That precedent suggests the current momentum has legs, especially as we head into the new year. Traders can use short-dated futures contracts to position for a continuation of this trend.<\/p>\n
Create your live VT Markets account<\/a>\u00a0and\u00a0start trading<\/a>\u00a0now. <\/b><\/p>\n","protected":false},"excerpt":{"rendered":" USD\/CHF weakens amid Fed rate cut expectations, US Dollar underperforms despite strong GDP and technical pressures.<\/p>\n","protected":false},"author":62,"featured_media":16961,"comment_status":"closed","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"_acf_changed":false,"footnotes":""},"categories":[59],"tags":[],"class_list":["post-37693","post","type-post","status-publish","format-standard","has-post-thumbnail","hentry","category-live-updates"],"acf":{"acf_article_selection_author":null},"aioseo_notices":[],"_links":{"self":[{"href":"https:\/\/www.vtmarkets.com\/en-asia\/wp-json\/wp\/v2\/posts\/37693","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/www.vtmarkets.com\/en-asia\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/www.vtmarkets.com\/en-asia\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/www.vtmarkets.com\/en-asia\/wp-json\/wp\/v2\/users\/62"}],"replies":[{"embeddable":true,"href":"https:\/\/www.vtmarkets.com\/en-asia\/wp-json\/wp\/v2\/comments?post=37693"}],"version-history":[{"count":0,"href":"https:\/\/www.vtmarkets.com\/en-asia\/wp-json\/wp\/v2\/posts\/37693\/revisions"}],"wp:featuredmedia":[{"embeddable":true,"href":"https:\/\/www.vtmarkets.com\/en-asia\/wp-json\/wp\/v2\/media\/16961"}],"wp:attachment":[{"href":"https:\/\/www.vtmarkets.com\/en-asia\/wp-json\/wp\/v2\/media?parent=37693"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/www.vtmarkets.com\/en-asia\/wp-json\/wp\/v2\/categories?post=37693"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/www.vtmarkets.com\/en-asia\/wp-json\/wp\/v2\/tags?post=37693"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}