The situation on Wall Street is going from bad to worse as traders continue to liquidate equity holdings. U.S. indices are struggling mightily with the DJIA DOW (-690), S&P 500 SPX (-77) and NASDAQ (-275) plunging to their largest daily losses of 2019. Amid the turmoil, safe-havens are putting up solid gains, led by gold and the Swiss franc. Subsequently, the USD/CHF ppears destined for a return to par value.
Safe-Haven Demand Is Up, USD/CHF Trends Lower
Investors are stocking up on Swiss francs to limit risk exposure and weather the financial storm created by the U.S./China tariff standoff. For the session, the USD/CHF has shed more than 60 pips amid the mad dash to preserve market share.
Here are the key levels to watch as today’s forex action concludes:
- Resistance(1): Bollinger MP, 1.0138
- Support(1): 62% Current Wave, 1.0025
Bottom Line: The daily 62% Fibonacci Retracement (1.0025) is a positive entry to the long in this market. Until elected, I will have buy orders queued up from 1.0028. With an initial stop loss at 0.9994, this trade produces 25 pips on a sub-1:1 risk vs reward management plan.
In times of financial strife, the Swiss franc typically gains value. It is a historical safe-haven currency and becomes a popular destination for investors during periods of market turbulence. That is exactly what we have seen today, with a majority of traders choosing to limit risk until the dust settles from the U.S./China tariff battle.