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Swiss Franc extends declines, USD/CHF set for a fifth straight gain on Friday

  • The CHF is broadly lower on the week, sending USD/CHF into a fresh six-week high.
  • Switzerland Producer and Import Prices slipped further in December.
  • SNB’S Jordan: appreciating Franc threatens Swiss inflation stability.

The Swiss Franc (CHF) slid further on Friday, extending recent losses as the market walks back a massive dogpile into the Swiss currency. The USD/CHF has climbed around 4.5% from December’s late low of 0.8332, a 12-year low for the pair.

Switzerland enjoys an economic environment massively different from its immediate European neighbors, with inflation already well within the Swiss National Bank’s (SNB) 2% maximum target and a stubbornly-healthy domestic economy.

The CHF gained significant value through 2023, climbing nearly 18% bottom-to-top against the US Dollar (USD) from 2022’s Q3 USD/CHF peak of 1.1047. With the popular CHF outrunning valuations and hampering the SNB’s ability to fine-tune policy using foreign currency reserves, the SNB flashed a warning to broader markets recently that if the CHF continues to appreciate, it will begin to transfer disinflationary pressure directly into the Swiss economy.

Having battled a disinflation cycle in the past, the SNB is in no rush to find itself mired in the same scenario again. Markets have apparently heeded SNB Chairman Thomas Jordan’s call for the time being, setting the USD/CHF on pace for its single-best weekly performance since late 2022.

USD/CHF Technical Outlook

The US Dollar is up around 1.85% against the Swiss Franc this week, climbing from Monday’s early bids near 0.8525, tapping the 0.8700 handle on Friday heading into the week’s closing bell.

The USD/CHF is set for its first technical challenge since finding the floor in late December, with the pair pushing directly into technical resistance from the 50-day Simple Moving Average (SMA) in the back half of the week’s trading.

A further technical ceiling is priced in at the 200-day SMA near 0.8850, with near-term technical barriers at the 0.880 handle where the pair last caught a swing high.

USD/CHF Hourly Chart

USD/CHF Daily Chart

 

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On Friday's session, the USD/JPY was observed to be mildly gaining, currently trading at 148.25, and will close a 2% winning week.
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