Is the Swiss Franc back to being a Reserve Asset?

May 2

This day we face news on retail sales and inflation rates in the land of milka chocolate and kinder eggs. Manufacturing, unemployment rate and production index data in some euro zone countries will also be important. In the afternoon, the US Dollar cross will be affected by the release of the US unemployment rate against the Swiss Franc. The Euro currency is expecting an interest rate adjustment that will affect its crosses in June and hence throughout the month we have seen a movement that goes from 0.98478 to 0.95658 euros per franc. At the moment the currency is in a median that has been generating with a 4 figure volume bell directing the current trend to a checkpoint mark (POC) in the area of 0.97890.

Looking at the currency's movement, it has been heavily influenced by the policies of the Fed and the ECB. Its movement between April 30 and May 1 has been a meteoric fall of -1.06%. A +0.72% price recovery would be feasible, given that the RSI is currently oversold at 26.88% versus its 200-day average of 57.87%. It is quite likely to see that the Franc is going to cut against the Euro with such a lax rate policy, so its target at this time from a technical point of view would be to recover the 0.98 area and then look for highs following the trend that has held almost throughout the first quarter and was interrupted in the second quarter.

Although it is true that the Swiss stock market has not been particularly lucid, the war conflict affecting Russia and Ukraine may be generating that in addition to the Swiss National Bank (SNB) continues to cut interest rates as it did in March to revalue against the Euro and the Dollar.

Ion Jauregui - AT Analyst




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