USD/CHF Testing the 50 SMA Whether it Will Hold the Downtrend
USD/CHF began to fall a few months ago, and sellers grabbed control in early October, before the USD started the crash lower. Safe havens started attracting attention back then due to the tensions in the Middle East, with moving averages turning from support into resistance on the H4 chart. Markets showed signs of escalation in the last few weeks of 2023, sending this pair to 0.8330s, where the decline has stopped for now.
The dovish comments made by Federal Reserve members and the fact that they accepted that the FED will start cutting interest rates soon were principally responsible for the bearish move in the USD in recent weeks and for the big decline in USD/CHF. US Treasury rates fell to multi-month lows, with the 5-yer bond yields down to 3.78% from 5% a few months ago, causing traders to lose interest in the USD. For the time being, traders predict that the first rate cut from the FED to come in March, followed by another 25 bps cut in May, and then betting on four more cuts, totaling more than 150 bps.
USD/CHF H4 Chart – Will the 50 SMA Stop the Retrace?
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| 🥇 |  | Read Review | FCA, CySEC, ASIC, MAS, FSA, EFSA, DFSA, CFTC | USD 100 | Visit Broker |
| 🥈 |  | Read Review | FSCA, FSC, ASIC, CySEC, DFSA | USD 5 | Visit Broker |
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| 8 |  | Read Review | CBCS, CySEC, FCA, FSA, FSC, FSCA, CMA | USD 10 | Visit Broker |
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So, this drop in bond rates, caused by the Fed’s dovish stance, has reduced the demand for the USD because lower local yields are less appealing to overseas investors. Besides that, geopolitical concerns remain high, favoring the CHF as a safe haven, while the USD has fallen due to weaker inflation numbers from the US.
The Swiss National Bank, on the other hand, has remained neutral, yet this pair continues to fall. The SNB’s latest policy decision had no major surprises, as they retained the neutral position. They dropped the words “further tightening may become necessary,” opting for a stance that confirms they are now on hold. But, that’s still more hawkish than the FED’s stance of more than 150 basis points of rate cuts this year.
The bearish momentum sent this pair below its 20, 100, and 200 Simple Moving Averages (SMAs), which meant that the selling force retained greater influence. However, the price moved above the 20 SMA recently and is facing the 50 SMA as resistance now, which will decide whether the selling pressure will continue. We decided to open a sell USD/CHF signal at this moving average yesterday, so we hope sellers return soon.
USD/CHF Live Chart
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