FxWirePro Short Term Outlook: Franc is finally ready to move towards 0.9 area

We believe that the Swiss Franc is finally ready to ride the weaker dollar and break the key resistance around 0.95 area (USD/CHF). We believe that the dollar has finally started to catch up with the falling Fed forecast. In December 2014, FOMC policymakers forecasted that the effective Federal funds rate would be around 250 basis points at the end of 2016. Even if the Fed does for a hike this year, the rate would be almost 190 basis points lower than the forecast.

The dollar hasn’t priced that in yet as it was buoyed by the monetary policy from other central banks namely European Central Bank (ECB).

Franc is currently trading at 0.958 per dollar and even if it reverse course, we don’t expect it to bounce beyond 0.99 area, instead, it is likely to strengthen in line with our previous call, where we extended target towards 0.86.

Anyone who missed out on that call may enter fresh shorts at USD/CHF at the current rate and at bounce with a target around 0.9 and stop loss around 0.99 area.