USDCHF made an upside break from its ascending triangle forex chart pattern on the 1-hour time frame as rumors of an SNB intervention hit the airwaves. Recall that this pair dropped sharply the other week when the Swiss central bank decided to scrap its currency peg.
At the same time, the central bank announced lower deposit rates, which are designed to encourage more lending activity. The SNB also added that it would watch exchange rate movements closely and is prepared to counteract any excessive franc appreciation.
Forex Chart Pattern Levels
As it turns out, SNB sight deposits surged to 365.486 billion Swiss francs last week, up from 339.614 billion francs in the prior week. The SNB can expand sight deposits through foreign exchange swap and repurchases of its own debt.
With that, USDCHF could be in for more upside and complete the breakout from the forex chart pattern. Bear in mind that the triangle is roughly 400 pips in height, which means that the rally might be of the same height and take price up to the .9200 level soon.
A quick pullback to the broken forex chart pattern resistance at .8800 might still be possible, especially if the Fed sounds dovish in their FOMC statement tomorrow. This might be the main event risk for this forex chart pattern setup, as the central bank’s rhetoric could set the tone for longer-term US dollar price action.
The US central bank is widely expected to retain its cautious stance and reiterate that rates will stay low for a “considerable time” even after easing has ended. At the same time, they could still indicate that they “can be patient” in considering policy adjustments. For now, the potential impact of the ongoing snowstom in the northeast US might also have an impact on USDCHF price movement.
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