Should You Buy USD/CHF as It Hits Parity?

USD/CHF presented one of the most solid moves within the Forex market in 2022. For now, currency trades at parity. That means 1 CHF equals $ USD, a development that hasn't happened since 2019. That reflects safe-haven currencies' demise. Also, the USD/JPY outlook reveals similar trends. Nevertheless, everyone attributes the weak yen to the monetary policies of the Bank of Japan.

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However, USD/CHF presents similar cases without SNB (Swiss National Bank) hitting the news wire. Therefore, one can conclude that market players dumped safe-haven assets in 2022, looking for safety in the USD, the globe's reserve currency.

Are We Nearing a Top?

The technical standpoint does not support the topping narrative. Classic technical reversal setups, like the double top or head and shoulders, require time to emerge. Also, fundamentals aren't supporting reversals for the pair.

Moreover, the United States Federal Reserve remained confident about ensuring two additional 50 basis point upticks in the coming three months. That means the dollar demand will continue surging within the upcoming sessions.

Market players recognize the Swiss National Bank as among the central banks participating in the Forex markets through Swiss franc sales. For years, analysts have claimed the Swiss franc is an overvalued asset, not reflecting the reality of the nation's economy.

That's because investors purchase the franc amid uncertain times, similar to how they bought the yen until lately. However, the narrative changed when most investors purchased these currencies to satisfy their safe-haven prestige because of the Russia-Ukraine conflict.

Currency investors prefer USD/CHF due to its inverse, strong correlation with EUR/USD. Meanwhile, EUR/USD remains the most vital pair within the Forex dashboard. A steady USD/CHF indicates that EUR/USD would continue its weakness.

The latest parity, something never witnessed since 2019, USD/CHF, ensures some relief to the SNB (Swiss National Bank). The bank encountered challenges repelling investors from the currency pair all those years, regardless of setting negative interest rates. Thus, this could not be the time to purchase the asset.

What are your thoughts about the information above? Feel free to comment in the section area below.



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