USD/CHF poised for further gains

After successfully closing the previous day above the critical 1.01 level, USD/CHF sustained its bullish momentum on Thursday and touched its highest level since Jan. 11 at 1.0145.

SNB in a tight spot

Data from Switzerland on Thursday showed that the GDP growth for the fourth quarter of 2016 was at a dismal 0.1%. Furthermore, good exports shrunk by 3.8% when compared to previous quarter. The strong franc continues to hurt the economy by making Swiss goods & services, which amounts to two-thirds of the GDP, more expensive. SNB’s current pace of 2.4 billion francs/week spending doesn’t seem to be enough as CHF remains as a safe-haven alternative amid growing concerns surrounding the French elections and Greece’s fiscal woes.

"To prevent the rise of the currency, the SNB would have to intervene to a far greater extent than the level they are at the moment," J. Safra Sarasin currency strategist Ursina Kubli said. "But the SNB probably doesn't want to intervene in an unlimited way because of concerns about the size of their balance sheet."

Technical outlook

As of writing, the pair is up 0.45% at 1.0135 facing the first resistance at 1.0150 (Fib. 78.6% - Jan. – Feb. Fall) ahead of 1.0195/1.02 (Jan. 9 high/psychological level) and 1.0235 (Fib. %61.8). On the downside, the first support is aligned at 1.01 (psychological level) followed by 1.0050 (20-DMA) and finally 1.000 (psychological level/Feb. 28 low).