Swiss franc continues to strengthen while gold remains stagnant at all time highs
Explore the latest movements of the USD/CHF pair, understand the factors driving investor sentiment in the US dollar and Swiss franc, and discover what traders at IG Group expect for this currency pair.
Key points
- USD/CHF declines to price levels not seen since early this year with a 3.32% drop in the last ten trading days
- Investor confidence in the US dollar remains low due to a disappointing jobs report, interest rate cut speculation, and geopolitical tensions
- Swiss franc shows a three-year correlation of +0.40 with gold prices, suggesting traders turn to franc and gold when the dollar weakens
- Over eighty percent of IG Group's dollar-swissie traders expect USD/CHF to rebound, holding long positions
USD/CHF depreciates to near 0.8400
The USD/CHF pair slid to a price level not seen since early this year and the euro's detachment from the franc in 2015. This detachment led to significant price fluctuations as the market adjusted. Recently, the pair has declined by approximately 3.32% over the past ten. This depreciation reflects ongoing market uncertainties and fluctuations in investor confidence in both currencies.
Risk aversion sentiment continues in the US
Investor confidence in the US dollar remains low due to a range of factors. A recent disappointing jobs report, speculation regarding potential interest rate cuts, geopolitical tensions, and fears of an economic slowdown all contribute to this sentiment. These elements create an environment where traders are cautious about holding the dollar, leading to its depreciation against other currencies like the Swiss franc.
The Swiss franc and its correlation to gold
The Swiss franc has historically been positively correlated with gold, showing a three-year correlation of -0.40 between USD/CHF and gold prices. This relationship suggests that when the dollar weakens, traders often turn to the franc and gold as stable assets. For forex traders, gold prices can serve as an additional indicator when trading USD/CHF, providing context and potential insights into market movements.
What’s next for USD/CHF
At IG Group, over eighty percent of dollar-swissie traders are holding long positions, expecting the USD/CHF pair to rebound. This sentiment may be influenced by recent statements from Fed Chair Powell regarding interest rate cuts as well as ongoing geopolitical and economic developments. Traders are looking for potential strengthening of the US dollar against the franc, making the coming period crucial for market movements and trading strategies.
How to trade US dollar
- Open an account to get started, or practice on a demo account
- Choose your forex trading platform
- Open, monitor, and close positions on USD pairs
Trading forex requires an account with a forex provider like tastyfx. Many traders also watch major forex pairs like EUR/USD and USD/JPY for potential opportunities based on economic events such as inflation releases or interest rate decisions. Economic events can produce more volatility for forex pairs, which can mean greater potential profits and losses as risks can increase at these times.
You can help develop your forex trading strategies using resources like tastyfx’s YouTube channel. Our curated playlists can help you stay up to date on current markets and understanding key terms. Once your strategy is developed, you can follow the above steps to opening an account and getting started trading forex.
Your profit or loss is calculated according to your full position size. Leverage will magnify both your profits and losses. It’s important to manage your risks carefully as losses can exceed your deposit. Ensure you understand the risks and benefits associated with trading leveraged products before you start trading with them. Trade using money you’re comfortable losing.