Market Leader reports that the latest report by the Swiss National Bank looks gloomy. In particular, the SNB report for May says that the central banks’ foreign currency reserves shrank from 522.2 billion CHF down to 517.5 billion CHF, which is 554,7 billion USD.
According to Masterforex-V Academy experts, the mentioned phenomenon can be explained mainly by means of the current weakness shown by the common European currency. As we all know, the SNB decided to unpeg the Swiss Franc from the Euro in January 2015, which triggered unprecedented volatile and resulted in a series of unpleasant surprises for many currency traders and their FX brokers. The peg was introduced in 2011 and existed for 4 years.
Potential expenses associated with supporting the national currency turned out to be the major reason for such a decision. The SNB’s official report says that those potential expenses might have been much bigger then the cost of the policy. That is why the central bank decided to abandon this idea. Apparently, after the unpeg, the Swiss Franc got stronger against other majors, including USD and EUR after getting rid of the burden of a weak Euro.
Still, a stronger Franc undermined the export-oriented Swiss economy, which is why the first quarter of the year resulted in an economic slowdown for Switzerland. The actual figures dropped below the forecasts. In particular, the Swiss GDP dropped by 0,2% over the reporting period relative to Q4 2014. The year-over-year growth slowed down to 1.1%.
As for USDCHF, Masterforex-V Academy reports that the currency pair is currently developing a mid-term downtrend, which means the Swiss Franc is still getting stronger against its American counterpart.
The closest levels of support are located at the local ow of 0.9245 as well as Fibo levels - 0.9215, 0.9185/74, 0.9148, 0.9126/12. At the same time, the closest major levels of resistance can be found at the top of the MF sloping channel along with the MF pivot 0.9500 (look at the chart below, courtesy of Masterforex-V Academy).
