Swiss Franc gets boost from safe-haven demand

• The Swiss Franc has found its feet after investors turn risk averse on Monday morning. 
• The launch of an EU probe into big tech giants' practices and renewed attacks on Kyiv are unsettling markets. 
• USD/CHF reaches an upside target and pulls back. 

The Swiss Franc (CHF) edges higher on Monday as increased risk aversion pushes investors into safe-havens, of which the Swiss Franc is one of the best known. 

The flight to safety comes on the news that the European Union (EU) has launched an investigation into big tech giants such as Apple, Google and Meta on Monday, according to ABC News. 

The news that Russia has launched hypersonic missiles at Ukraine’s capital Kyiv may have further unsettled markets. 

Major European indices such as the DAX, CAC40 and FTSE 100 are down by roughly half a percent on Monday at the time of publication. US Futures are off by a quarter of a percent. 

Swiss Franc benefits from safety trade

The Swiss Franc is gaining at the expense of competitors as risk aversion permeates markets at the start of the week. The news on Monday that the EU Commission has launched an investigation into big tech companies for suspected “non-compliance” of its Digital Markets Act (DMA) has been given as a key factor rattling investors. 

The DMA seeks to broadly level the playing field in digital markets by preventing online big tech platforms from acting as “gatekeepers” and thereby monopolizing digital ecosystems. 

The Commission “suspects that the measures put in place by these gatekeepers fall short of effective compliance of their obligations under the DMA,” according to the EU’s press release. 

In Kyiv, meanwhile, a series of hypersonic missiles escalated the conflict in Ukraine, causing damage to buildings and wounding two civilians in the central Pechersk district, as well as damaging buildings in the Solomiansky, Holosiyvsky and Dnipro districts, according to the Independent. 

Technical Analysis: Swiss Franc meets first target for breakout and pulls back

USD/CHF, the number of Swiss Francs purchasable with one US Dollar (USD), is trading in the upper 0.8900s after breaking out and rallying above a range it had been yo-yoing in since the middle of February. 

The pair has met the conservative target for the breakout at 0.8984 and has pulled back. The target is calculated as the 0.618 Fibonacci extension of the height of the range extended from the breakout point higher. 

US Dollar versus Swiss Franc: 4-hour chart

The next target for the breakout is at 0.9052, the full height (1.000 ratio) of the range extrapolated higher. 

There is a risk the pair could correct lower before attempting the next target. The Moving Average Convergence/ Divergence (MACD) indicator has just crossed below its signal line on the 4-hour chart, indicating the probability the pair will pull back. 

If the correction continues it could target at the midpoint of the breakout rally, situated at roughly 0.8930. 

Beyond that, the pair is overall seen continuing the short-term uptrend that formed prior to the range and its breakout higher. 

It would take a break back below 0.8729 to suggest a short-term trend reversal and the start of a deeper slide. 

The first target for such a move would be the 0.618 Fib. extrapolation of the height of the range at 0.8632, followed by the full extrapolation at 0.8577, which is also close to the 0.8551 January 31 lows, another key support level to the downside.