USD\/CHF fell for a second session on Tuesday, yet held above the week\u2019s low of 0.7921 as broad US dollar weakness weighed on the pair. It was trading at 0.7933, down 0.16%, with pressure linked to the dollar\u2019s correlation with softer oil prices and reduced expectations of Federal Reserve rate hikes.<\/p>\n
Technically, the pair remains neutral to mildly upward-biased after stalling near 0.8000, although the RSI is weakening and keeps focus on the 200-day SMA at 0.7906. A break below that level would point to the inverted head-and-shoulders neckline near 0.7878 and then the 50-day SMA at 0.7864; on the topside, a move above 0.7968 targets 0.7976 and 0.8000, before 0.8042 and 0.8100. In spot moves, CHF was strongest against JPY, while the heat map showed USD down 0.15% versus EUR and up 0.08% versus JPY, with CHF up 0.17% against USD and 0.24% against JPY. The franc was pegged to the euro between 2011 and 2015, and the removal of the cap drove a rise of more than 20%; SNB policy targets inflation below 2% and meets four times a year, while EUR-CHF correlation is described as above 90%.<\/p>\n
We are seeing the USD\/CHF pair pull back towards its 200-day moving average near 0.7906, creating a key decision point for the coming weeks. This weakness in the dollar is partly fueled by the recent May US CPI report, which came in at 2.8% and lessened any pressure on the Federal Reserve to consider rate hikes. For now, this supports a bearish stance on the pair.<\/p>\n
We believe derivative traders should consider buying put options if the pair decisively breaks below the 0.7906 level in the coming days. A break here would signal further downside momentum, making puts with a strike price around 0.7875 an attractive way to play a move toward the next support zone. This strategy allows for defined risk while capitalizing on the current selling pressure.<\/p>\n
Adding to the potential for a downward move, all eyes are on the Swiss National Bank’s policy meeting scheduled for next week. With recent Swiss inflation holding firm at 1.9%, close to the SNB’s target, the market is pricing in a hawkish tone which could further strengthen the franc. This event makes short-term volatility plays, like straddles, worth considering for those who are directionally uncertain.<\/p>\n
However, we must not ignore the underlying upward bias, and a bounce from current levels remains a distinct possibility. If USD\/CHF reverses and climbs back above the 0.7968 high, we would see this as a trigger to purchase call options. Targeting the psychological 0.8000 level would be the primary objective for this bullish trade.<\/p>\n
Historically, the Swiss Franc has acted as a safe haven, a trait that could come into play if broader market uncertainty resurfaces. Looking at the options market, we see one-month implied volatility for USD\/CHF has ticked up to 6.5% ahead of the SNB meeting, compared to its three-month average of 5.8%. This suggests traders are preparing for a larger-than-usual price swing, reinforcing the case for using options to manage risk or speculate on the outcome.<\/p>\n","protected":false},"excerpt":{"rendered":"
USD\/CHF slips as dollar weakens, tests 200-day SMA; break lower favors puts, SNB meeting may boost volatility.<\/p>\n","protected":false},"author":103,"featured_media":16968,"comment_status":"","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"_acf_changed":false,"footnotes":""},"categories":[59],"tags":[99,103,9,57,97],"class_list":["post-55239","post","type-post","status-publish","format-standard","has-post-thumbnail","hentry","category-live-updates","tag-central-bank","tag-derivatives","tag-dollar","tag-franc","tag-volatility"],"acf":{"acf_article_selection_author":null},"aioseo_notices":[],"_links":{"self":[{"href":"https:\/\/www.vtmarkets.com\/en-ca\/wp-json\/wp\/v2\/posts\/55239","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/www.vtmarkets.com\/en-ca\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/www.vtmarkets.com\/en-ca\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/www.vtmarkets.com\/en-ca\/wp-json\/wp\/v2\/users\/103"}],"replies":[{"embeddable":true,"href":"https:\/\/www.vtmarkets.com\/en-ca\/wp-json\/wp\/v2\/comments?post=55239"}],"version-history":[{"count":0,"href":"https:\/\/www.vtmarkets.com\/en-ca\/wp-json\/wp\/v2\/posts\/55239\/revisions"}],"wp:featuredmedia":[{"embeddable":true,"href":"https:\/\/www.vtmarkets.com\/en-ca\/wp-json\/wp\/v2\/media\/16968"}],"wp:attachment":[{"href":"https:\/\/www.vtmarkets.com\/en-ca\/wp-json\/wp\/v2\/media?parent=55239"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/www.vtmarkets.com\/en-ca\/wp-json\/wp\/v2\/categories?post=55239"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/www.vtmarkets.com\/en-ca\/wp-json\/wp\/v2\/tags?post=55239"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}