With the rate cut initiated by the Swiss National Bank, the Swiss currency is looking gloomy. It even “pays” itself the luxury of following the Japanese yen in terms of negative relative performance against the dollar, the euro, the pound sterling but also the Canadian dollar and the Aussie. Just that!
A month ago, we headlined “the Swiss franc takes a little slap”. If technically the case was already decided against the euro, other currencies have joined the movement. In other words, carry trade enthusiasts can now count on the Swiss currency to finance their operations in more profitable currencies. The CHF is indeed an interesting alternative to the Japanese yen due to the risks weighing on possible intervention by the Bank of Japan to support its currency.
Source: Bloomberg
The graph above traces the evolution of the AUDCHF in weekly data over five rolling years. After having evolved within an ongoing downward trend since 2022, it exited from the top of its bearish channel thanks to a flat consolidation (green rectangle). The overflow of the upper limit of this accumulation phase associated with the crossing of the 40-week (200-day) moving average and the validation of bullish divergences on the RSI, authorizes recovery objectives at 0.6169 or even 0.6350. In this scenario, the support at 0.5815 should no longer be depressed at the daily close.
In the rest of the world, the EURUSD has just made its pullback towards the old support at 1.0708 and remains under bearish pressure as long as 1.0730/60 is not exceeded. The downside target is maintained around 1.0537/06. Same story for the pound sterling against the US dollar which has also just tested its old support which has become resistance at 1.2500/30 which should mark the resumption of the downward trend underway since the beginning of March.
