The USDCHF pair formed multiple reversal patterns at the 0.90 level. However, it still struggles against significant resistance at 0.92, frustrating bulls. The Swiss National Bank (SNB) later in the trading week may offer a reason for the pair to broke higher, although it seems like the price action is dominated by the USD rather than the CHF driven news.
The SNB is a central bank like no other. It constantly intervenes in the currency market and makes no secret of it.
While it has an inflation-targeting mandate of creating inflation around the 2% level, the SNB closely monitors the value of the CHF. It is also the central bank that has the lowest interest rate level in the developed world. Not only tha, it moved the rate below the zero level, but it keeps them at -0.75%, the lowest when compared to any other central bank. Yet, the CHF appreciates from time to time, forcing the SNB to intervene.
How can it intervene with the rates already so low? One way to do this is to own foreign assets. To buy them, the SNB sells CHF and buys other currencies to pay for the assets denominated in such currencies. As such, the SNB is one of the largest investors in the tech sector in the United States, having participations in companies like Microsoft or Apple.
The SNB is not expected to announce anything surprising this Thursday. However, because the central bank meets quarterly, not every six weeks like most other central banks do, it is always worth listening what it has to say.
The USDCHF put a double bottom at the 0.90 level and now struggles at the 0.92 resistance. A break higher there opens the gates for the measured move.
Bulls would want to go long on a break above 0.92 with a stop-loss at 0.9050 and target 0.94.
