Although there has been some scuffling so far in June trading, USD/CHF finally fell below a key support threshold yesterday.
USD/CHF daily chart
The 200-day moving average (blue line) fell back along the 61.8 Fib retracement level of this year’s upward swing.
The pair’s decline is noteworthy as downward momentum continues to strengthen after dropping below 0.9000 in early June, and if anything, the seasonal trend continues to strengthen as previously outlined here. As highlighted in the post, June is the second worst month for USD/CHF in the past 20 years.
Recent developments suggest that the SNB may have played its part: the latest current account data is an indirect indication, but we should be able to see it tomorrow.
If the SNB is truly worried about imported inflation, it could surprise by keeping interest rates unchanged, which would undoubtedly give the franc further impetus, since markets are pricing in around a 67% chance of a rate cut tomorrow.
So is the franc poised for further gains? Given the political situation in Europe, I think there is reason to expect the franc to remain supported, even though the Swiss National Bank did indeed cut interest rates on Thursday.
