Swiss Franc Fails To Capitalize Despite Solid GDP Report

By Usman Ahmed

Talking Points

• USDCHF pair was seen trading higher and looks set to challenge the 0.9600 resistance area.
• Swiss Gross Domestic Product was released by the Swiss Statistics, which exceeded the market forecast and posted an increase of 0.6% in the fourth quarter of 2014.
• More upsides are likely in the USDCHF pair as sellers failed to defend buyers.

Technical Analysis

The US dollar traded higher against the Swiss franc recently, and cleared the 0.9540 resistance area to surge higher. There is a monster bullish trend line on the hourly chart of the USDCHF pair, which is acting as a hurdle for the pair. The pair recently corrected lower, but found support around the 23.6% fib retracement level of the last leg from the 0.9449 low to 0.9596 high. The US dollar buyers look aggressive in the near term and there is very chance that the USDCHF pair might continue trading higher.

If the USDCHF pair manages to clear the last high of 0.9596, then a break above the 0.9610 swing area is feasible in the near term. We need to see how the pair trades in the short term.

Swiss GDP

There was a major release lined up in Switzerland today, as the Swiss Gross Domestic Product was released by the Swiss Statistics. The forecast was of a 0.3% gain in the fourth quarter of 2014, compared to the same quarter a year ago. However, the outcome was a positive one, as the Swiss GDP increased by 0.6% in Q4 2014.

The last reading was also revised up from 0.6% to 0.7%. Overall, the report was better than forecasted, but failed to help the Swiss franc in the near term.

Trade Idea

Buying dips around the highlighted trend line looks like a good option moving ahead, as long as it stays above the same.

_______________________

This is a guest article submitted by Usman Ahmed who is Chief Currency Strategist at Exchangecurrency.com. This website converts exchange rates here