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Swiss Franc Falls on SNB Negative Interest Rates

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The CHF fell against the AUD after the Swiss National Bank (SNB) said it plans to lower its overnight interest rate to -0.25%, to stop further currency appreciation. The Australian dollar moved higher for second consecutive day against the Swiss Franc (Wednesday +0.20%, Thursday +1.23% and today +0.09%).

On the daily chart, the pair has clearly gained some momentum after rebounding from the 0.7835 area and could simply be going through another technical correction before it continues its downtrend move.

However, for now we could see another test of the 0.7950 level before the start of the correction towards the 0.8115 barrier. Therefore, buyers would enter the market around 0.7950 targeting the 0.8115 barrier. A break of this should then prompt a move back towards the psychological level of 0.8200. This area is significant as it includes the descending trend line, as well as the 50-period simple moving average on the daily chart.

Medium-term studies support further upside movement, since the MACD is trying to cross above its trigger line. In addition, the Stochastic has exited its oversold zone suggesting the pair is oversold and about to push much higher. Furthermore, the Average Direction Index supports this idea since its sloping downwards indicating a weak trend.

Alternatively, a failure to break above the 0.8050 level, could provide an opportunity to retest the key support zone at 0.7800 – 0.7835, and thus would negate any bullish scenarios for the pair.

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