US dollar/Swiss franc highly correlated with the euro

LONDON (ShareCast) - The US dollar (USD)/Swiss franc (CHF) has been shadowing the bullish rally on the euro (EUR)/CHF since the Swiss National Bank intervened in the foreign exchange market last August and September in order to halt the revaluation of the Swiss franc and peg the EUR/CHF above 1.20. The currency pair is approaching that level again, leading us to consider the possibility of a new central bank intervention to weaken the franc. In terms of technical analysis, the USD/CHF is trading between the resistance marked by the 50-day moving average and the support marked by the 100-day moving average. The stochastics and relative strength indices are rebounding from oversold levels. This leads us to believe that the currency pair will attack the current resistance at 0.9276. Looking at the fundamentals, the Swiss economy is highly dependent on the Eurozone and especially its main trading partner Germany. According to recent estimates provided by the International Monetary Fund (IMF (Berlin: MXG1.BE - news) ), the Swiss economy will grow by 2.1% in 2011 and 1.4% in 2012 while the US is expected to expand 1.8% both years. In terms of interest rates, the Swiss National Bank and the Federal Reserve are equally applying monetary easing policies with their respective rates at the 0-0.25% range. Furthermore, the Eurozone's debt crisis is making the Swiss currency even more of a safe haven. Despite the impact of the debt restructuring and central bank intervention, Swiss assets continue to appear attractive.