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Switzerland may Return to Neutral Status Soon

11/16/2022 12:47 PM

Over the past two weeks, the franc has regained most of the ground lost at the end of the summer, and the USD/CHF pair is now trading in a downtrend at 0.9457.

Also to the correction of the US dollar, the main driver of the downward dynamics of the trading instrument, experts call the readiness of the country's authorities to return to a full-fledged "neutral status." The Swiss economy is actively declining after the outbreak of a military conflict in Ukraine and joining the anti-Russian sanctions, which violated more than 200 years of neutrality of the country. Six months later, the energy crisis and rising inflation helped Swiss National Bank officials withdraw from the policy of negative rates, a serious blow to the reputation of the world's main financial haven. Yesterday, former People's Party (SVP) chairman Christopher Blocher announced the registration of the Pro Suisse Association initiative, which involves amending the Constitution to consolidate neutrality and prohibit political bodies from making decisions that contradict this principle as joining military or defense alliances. To submit the initiative to a national referendum, it is necessary to enlist the support of at least 100K citizens of the country by the spring of next year.

Today, the US currency fell to 106.500 in the USD Index, the lowest since mid-August, on the back of macroeconomic statistics: the producer price index increased by 0.2% in October, while analysts expected a value of 0.4%, and the core price index manufacturers remained unchanged compared to September, although analysts expected it to increase by 0.3%.

On the daily chart of the asset, the price has slowed down its active decline and is being corrected near the low at the end of summer.

Technical indicators maintain a sell signal: fast EMAs on the Alligator indicator are well below the signal line, and the AO oscillator histogram forms downward bars in the sell zone.

Resistance levels: 0.9484, 0.9600. | Support levels: 0.9410, 0.9300.

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