USD/CHF Slides Towards 0.8900, Hitting Lowest Levels since 2015

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Principal Points

• Losses continue to characterize the pair
• The market waits in anticipation for the Initial Jobless Claims

The USD/CHF pair is marking a third consecutive day of losses on Thursday as the US dollar has been heavily offered across the board. The Swiss franc, on the other hand, has seen increased buying momentum against its counterparts.

USD/CHF is currently hovering around the level of 0.8936 with a low of 0.8925 in the early hours of the opening of the European trading session. The pair has failed to attract traders and investors and has registered a drop of 8.20% year to date. The current level indicates a 5-year low as the pair slipped towards the 0.8900 marks, a level not seen since the decision of the Swiss National Bank to abandon the cap on the franc’s value against the euro. On Jan 15, 2015, the Swiss franc soared as much as 30% in chaotic trades across the currency market and caused a decline of 28.90% in the value of USD/CHF. However, it took the pair a bit more than two months to recover the losses from Jan 15 and the USD/CHF was again gravitating towards parity.

Fast forward to 2020, the pair saw a decreased appetite by market participants as they flocked to US and EU equities, which have rallied in November with global equities posting a 13% increase, the biggest monthly gain on record so far. The gyrations in the equity markets pushed down the value of the US dollar as investors still keep their hopes up that more US fiscal stimulus measures are on the way. The sell-off in the greenback is also aided by vaccine progress as the UK already approved a vaccine and will start administering it as soon as next week, while the US is expected to authorize a coronavirus remedy before the end of December.

Bearish Trend Continues for the Pair

On the technical front, the USD/CHF pair was long held in a consolidation zone. The levels between 0.9200 and 0.9000 were acting as resistance and support for the exchange rate for August through November. Well below the 200SMA and slightly below the 100- and the 50-day moving average, the USDCHF remains in bearish territory, continuing a bearish trend that started in May 2019 when the pair hit a high of 1.0237 and has since then gradually spiraled down.

The US dollar is marking a strong bearish trend against other counterparts, too. The greenback is trading at a three-year low against the Canadian dollar. The USD/CAD pair reached its lowest point on Thursday at 1.2910. Interestingly, the pair is only 0.48% or 60 pips changed compared to the opening price on Jan 2 this year, while in the meantime going over 10% up and down when the first coronavirus wave swept the markets. The Japanese yen advanced by about 3.70% or 400 pips against the US dollar for the year to date, also gyrating to the extremes during the March mayhem.

As the continuation of the sell-off in the US dollar is still a real opportunity, market participants need to be wary that the current environment remains uncertain and developments may surprise with unexpected turns. On the agenda today, the market will be watching the Initial Jobless Claims expected to hit 775K versus 778K prior. On Friday, the US is set to release the NFPs with a considerably high expectation for

469K versus 638K prior. The release will also come with unemployment data, expected to reach 6.8% for November versus 6.9% for October.

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