After a bit of a tussle so far in June trading, USD/CHF finally fell below a key support threshold yesterday.
The 200-day moving average (blue line) has given way, alongside the 61.8 Fib retracement level of the swing higher this year.
It's a notable breakdown for the pair, as the downside momentum continues to build after the break below 0.9000 at the start of June. And if anything, it continues to reinforce the seasonal trend as outlined here previously. As highlighted in the post, June is the second-worst month for USD/CHF over the last 20 years.
In looking at the latest moves, perhaps the SNB also has played a role in that. The latest sight deposits data here is an indirect indication but I guess we'll get confirmation tomorrow.
If the SNB is indeed worried about imported inflation, they could surprise by keeping rates on hold instead. It will definitely give the franc an added shot in the arm. That is because markets are pricing in a ~67% probability of a rate cut tomorrow.
So, is the franc poised for further gains? I'd say considering the political climate in Europe, there is reason to expect the franc to stay underpinned. That is even if the SNB does indeed cut rates on Thursday.
