USDCHF, Daily
Delivering a very clear dovish message, Lagarde pointed out what the ECB will do in the short, medium and long term. In the short term, she’s hinting at more QE as soon as December. In the medium term, Lagarde points to an explicit focus on core inflation. Finally, over the long term, she is hinting at a symmetrical inflation target with a kind of soft Average Inflation Targeting (AIT).
Due to the negative correlation, if EURUSD goes down it is likely that USDCHF will go up. So it’s important to look at the USDCHF exchange rate. USDCHF bounced off 0.9000 levels when the US Dollar Index rebounded from a low of 0.9170 in early September. The recent decline in the USDCHF pair occurred in the context of the overall USD weakness.
But it looks like there will be resistance; by falling to the level of 0.9200, USDCHF met the support in the confluence area. On the one hand, the previous horizontal resistance turned into support. On the other hand, the market also fulfills dynamic support at the same level provided by the channel’s rising median line. 0.9200 is key for now as we head into the final quarter of 2020.
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Adi Phangestu
Market Analyst – HFIndonesia
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