Swiss Franc rises after positive survey data

• The Swiss Franc gains after the ZEW survey shows Swiss investors are optimistic about the economic outlook. 
• The survey showed an increase in sentiment for the second month in a row. 
• USD/CHF hits a key upside target and rolls over – potentially initiating a pullback. 

The Swiss Franc (CHF) is trading higher in most key pairs on Wednesday, after the release of a Swiss investor survey showed upbeat responses regarding the outlook for the Swiss economy for the second month in a row. 

Swiss Franc gets boost after investor survey reflects optimism

The Swiss Franc is rising midweek after the release of the Swiss ZEW Survey – Expectations for March, which showed investors were, on balance, positive in their responses, by a margin of 11.5, up from 10.2 in February. 

The result marks the second positive month in a row after results fell and remained below zero in March 2022. The survey is thought to reflect investors’ optimism following the 0.25% reduction in interest rates by the Swiss National Bank (SNB) at its March meeting, according to Tradingeconomics.com. 

Swiss ZEW Survey – Expectations: 5-year chart

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

USD/CHF – the number of Swiss Francs that can be bought with one US Dollar (USD) – broke above the key 0.9000 level and reached a peak of 0.9063 on Wednesday, before  rolling over. 

The pair looks like it may be pulling back within an established short-term uptrend, which began after USD/CHF broke out of the range it had been trading in for most February and the first half of March.  

US Dollar versus Swiss Franc: 4-hour chart

The pair has just reached the target of the range breakout at around 0.9050, calculated by taking the full height of the range and extrapolating it higher. 

Since achieving the price objective, there is a risk the pair could correct lower. The Moving Average Convergence/ Divergence (MACD) indicator is showing bearish divergence with price at the recent peak when compared with the March 22 peak. 

Although price continued rising, the MACD failed to. This is a sign of underlying weakness (circled). 

The Relative Strength Index (RSI), another indicator, is sitting in overbought which is a sign traders should not add to their bullish bets. If it comes down and exits overbought it will be a signal to close bullish bets and short the pair. 

If a pullback extends lower, it will probably first fall to support at the March 22 highs and the last higher high at 0.9020. 

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 deeper slide below 0.8960 to bring into question the dominance of the uptrend and suggest the possibility of a reversal. 

A break back inside the range, confirmed by a move below 0.8890, would be required to mark a short-term trend reversal and the start of a deeper slide. 

The first target for such a move would be the range lows at roughly 0.8715.