USD / CHF likely to fall further due to US election results

MUFG Bank Analysts they see a possible business idea in shortening the USD/CHF whereas the US dollar is likely to weaken further following the US election results. They point out that the Swiss franc will continue to benefit from currency debasement fears.

Key statements:

“USD / CHF is currently testing key support at the 0.9000 level, where the lows of late August / early September are. If those levels break, the USD sell-off could accelerate. There is little to no clear support level for USD / CHF below the 0.9000 level, aside from the lows that followed the CHF surge in early 2015, when the SNB cleared the 1.2000 floor for EUR / CHF. It could open the door for a pullback towards the 0.8500 level for USD / CHF. ”

“As we highlight in our article FX ViewWe believe that Joe Biden’s increasingly likely election victory supports our outlook for further USD weakness. It will reinforce pressure on the Fed to step up monetary easing to support economic recovery, especially now that Congress is likely to remain divided. the
The CHF has been one of the main beneficiaries of the currency debasement trade alongside the price of gold. ”

“The ECB is prepared to announce a further significant expansion (over € 500bn) of its own QE program in December, increasing the relative attractiveness of the CHF against the EUR as well. The CHF is even strengthening against the USD and EUR as the global equity markets rebound, which we see as a bullish sign. The main risk to the trading idea that could curb upside potential is that the SNB could step up intervention again. ”