USD/CHF: Swiss Franc gains even after weak CPI data

NEW YORK (Forex News Now) – The Swiss franc has gained in European trading today, even after having a weak month over month CPI release that missed analysts estimates.

The average analyst estimate for the Consumer Price Index in Switzerland was 0.7%. However, the release that came out at 4:15 GMT this morning printed a 0.5% number. Under normal circumstances, this might have pushed the Franc lower.

The world’s FX traders are presently worried about larger issues, and as such, the announcement was somewhat ignored as the other currency in the pair, the U.S. dollar, is being pushed around by the Federal Reserve’s quantitative easing policy announced just yesterday.

As the chart below suggests, FX traders have continued the longer term trend of buying the franc, and selling the dollar, as a recent uptrend line on the daily chart has not only been violated, but the FX traders have been pretty relentless in their selling of the pair.

It should also be noted that the “parity” level saw fresh selling, as it was a former support line, this is to be expected. It was simply a retrace for the market participants that didn’t get a chance to sell earlier to be able to enter the market as well.

As this becomes a self-fulfilling cycle, traders will certainly be aiming for recent lows, as shown by the daily hammer marked by the arrow at the bottom of the chart. If traders manage to push prices below the bottom of the hammer, this will clearly signal that fresh lows are going to be found, and that the longer term trend is clearly still intact.

With the Federal Reserve going into quantitative easing, there is absolutely no reason to think that this will not happen. The larger supply of Dollars will simply make the demand for those Dollars fall.