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FX.co ★ USD/CHF: Defensive asset Swiss franc is slowly getting notice

USD/CHF: Defensive asset Swiss franc is slowly getting notice

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Traders during the times of economic and political uncertainty usually turn to defensive assets, which are not often used in exchange deals. In any case, such transactions rarely cause sharp disputes among experts and market participants. The Swiss franc is one of those currencies in the shadows, but it is quite a strong currency.

Swiss franc is considered by several investors as one of the most reliable protective assets that can save capital in unstable times. Traders associate the reliability of this currency with the strength of the country's banking system. Its stability is already tested with time, although there are some difficulties. For example, the permanent use of the Swiss franc as a protective asset is not the most profitable option. Experts believe that this currency is strongly influenced by the monetary strategy of the National Bank of Switzerland (NBS). Therefore, if the direction of the monetary policy of the regulator changes, Swiss franc will turn in the opposite direction, sharply limiting investors' profit.

Fears in the market are caused by the current policy of negative rates, which is used by the NBS. This measure assumes a negative return on deposits, which also worries investors. However, despite the lack of a tangible financial result when investing in CHF, it is perfectly suitable for the role of a "safe haven" asset. Recently, this currency is considered as one of the most expensive currencies in the world. It should be recalled that after the authorities stopped supporting its course, the Swiss franc has clearly strengthened.

Yesterday, it showed its sharp growth. At the same time, the USD/CHF pair did not go beyond the current range, moving around the strong support level of 0.9100. The situation remained almost unchanged today. This pair continues to trade in the range of 0.9096-0.9097, demonstrating weak attempts to rise.

However, some traders are still committed to trade on the EUR/USD pair, despite rising uncertainty. They consider this classic pair as more reliable, but many of them are ready to change their preferences. Some market participants are determined to try the new currencies.The Swiss franc has been and remains a strong protective asset that guarantees the safety of invested funds, but it was unnoticed for a long time due to the US dollar, euro and the pound. Experts believe that it is the time of CHF now and the market should take advantage of it.

Analysts said that the dynamics of the USD/CHF pair is more free than any other currencies. With strong market movements, the pair manages to rise by 20-30, and sometimes even 50 points. In a situation where the direction of movement is easily calculated, traders use the Swiss franc. In this case, experts emphasise that you can expect an impressive one-time profit.

Experts recommend trading on this currency due to current global tension and the high probability of a nationwide quarantine in a number of countries amid the second wave of COVID-19. Therefore, defensive assets are in demand right now, which is headed by the CHF. The advantage of this currency is the fact that the national regulator is ready to postpone additional measures of monetary stimulus. If the current NBS monetary policy is maintained, the franc will receive a strong impulse to rise.

*The market analysis posted here is meant to increase your awareness, but not to give instructions to make a trade
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