CHF Following First SNB Interest Rate Rise in 15 Years

Yesterday, the SNB raised interest rates by 50 bps to -0.25% from -0.75%, the first increase in 15 years, , driven by inflation. The SNB suggested further rate hikes as long as inflation remains above 2%. This change in rates marks the SNB joining the other world banks in combating much higher than expected inflation, which is currently at 2.94% for Switzerland, the highest level in 15 years.

As a result of this unexpected increase, the Franc rallied more than 2% across a number of pairs, giving strength to the Swiss currency.

Historial IPC de Suiza Fuente: https://es.tradingeconomics.com/switzerland/inflation-cpi

The SNB commented that inflation is spreading to products that no longer have to do with the Russia-Ukraine war. In its report it announced large increases in its economy, including the accumulation of inflation in 2022 to 1.4%. Year-on-year prices for transportation rose +9.0%, household items rose +5.3%, housing rose +3.7%, clothing and footwear rose +4.4%.

“The tighter monetary policy is aimed at preventing inflation from spreading more widely to goods and services in Switzerland. It cannot be ruled out that further increases in the SNB policy rate will be necessary in the forseeable future.

The central bank is ready to intervene in the markets to control the excessive appreciation or weakening of the Swiss franc.”

-Thomas Jordan, SNB President

AUD/CHF -D1 – Price: $0.68072

The price tested 0.70000 today and fell sharply by more than -250 pips to leave lows at 0.67960, a price not seen for a long time.

The price is holding at 2-month lows, within a flag that has been expanding its lows and highs of 2021-2022 lows at 0.65000.

Breakout of 50MA + 20MA + 100MA and 200MA tested today.

CAD/CHF -D1 – Price: $0.74800

The price made a double top when it reached the 0.78000 level, a resistance that has been maintained since 2018. The price then began a fall from this level, today reaching May lows with one single candle of -290 pips breaking 0.77000-0.75000 along with the SMA of 20 and 50 periods, closing testing the SMA of 100 periods.

Supports at 0.74000 and 0.73500, 200MA at 0.73773 and 0.73000, and February lows at 0.71778 coinciding with the Fibo 88.6% at 0.71778 and from there to late 2021 lows at 0.70963.

CHF/JPY -D1 – Price: $138.120

The price rose strongly today after reaching the support at the 20 period SMA and the psychological level of 135.00. At the moment it has broken the current high at 137.782 and is heading for 2015 all-time highs at 139.017 leaving a range of resistance until the psychological level of 140.00.

EUR/CHF -D1 – Price: $1.02089

Double top at the 1.05000 level – Today the price broke the bearish flag that was formed in March, with a strong candle that lowered 208 pips after testing the 1.04000 level breaking the 20 + 100 + 50 period daily SMA, in addition to the 1.03- 1.02 levels, reaching the lows of May.

Supports at 1.0100 and then down to 1.0.

Resistance at the 1.0300 level, broken flag guideline and broken moving averages.

GBP/CHF -D1 – Price: $1.19240

The price fell 320 pips, breaking the key support at 1.20000 and reaching the buy zone of the bearish channel that has been going since 2021, piercing lower with the shadow of today’s daily candle, but closing inside the channel.

The price could rise towards the upper part of the channel, but would have to go through the resistances at 1.20000, the 20-period SMA and the 50-period SMA to reach the previous highs at 1.22940. If the decline continues and the channel breaks, support would be at the psychological level of 1.17000, the December 2020 lows at 1.16825 and from there a possible free fall to the 2020 lows in the range of 1.11119-1.13043.

NZD/CHF -D1 – Price: $0.61490

The NZDCHF pair has maintained a stable bear channel since March. Today the price fell -170 pips after a pullback to the bear flag it formed during May, breaking the 0.62000 support and testing the 0.61000 level but closing above it and reaching the lows of the beginning of the year.

In the case of breaking these lows, support would be at the psychological and key level of 0.60000 that coincides within the range up to 0.59473 with the lows of October 2020.

Resistance at 0.62000, downtrend channel at 20-day SMA, 100-50 SMA at 0.62888 and up to 0.63000.

USD/CHF -D1 – Price: $0.97000

The price is failing to hold above the resistance from 2010 and the psychological level of 1.0000. The price set a double top at said resistance and headed down to May lows earlier today with a strong 350 pip candle that broke the 20 and 50 period SMA, closing just above the lows.

If the 0.95500 level is broken support would be at the psychological level below the lows at 0.95000 and from there to the March highs at 0.94000. 100-period SMA at 0.94832 and 200-period SMA at 0.93492.

A bullish scenario cannot be considered until the strong resistance at 1.0000 is broken.

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Aldo Zapien

Technical Analyst

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Sources:

  1. https://www.fxstreet.es/news/snb-el-franco-suizo-ya-no-esta-altamente-valorado-por-la-reciente-depreciacion-thomas-jordan-202206160814
  2. https://www.ft.com/content/f9c5fc13-3101-4046-984b-c9fa3a5daabc
  3. https://datosmacro.expansion.com/ipc-paises/suiza#:~:text=La%20tasa%20de%20variaci%C3%B3n%20anual,es%20del%201%2C4%25.

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