2021 USD/CHF Outlook: Deeper Losses Ahead due to Sluggish USD

WikiFX News (11 Feb.)- USD/CHF opened 2021 with a yearly low of 0.8758. The US dollar staged a powerful rally as the country embraced a new administration. However, WikiFX expects the pair to decline for a considerable period in 2021, after seeing the end of the rally, the dynamic Swiss economy, and the strong CHF.

The dollar will find its short-term upsides limited since the stimulus plan is on the way. Whats more, it will find no more momentum for its temporary gains and then ease back amid the rampant pandemic and the pressures of the rebounding euro.

In contrast to the hard-hit European economies, Switzerland has economically withstood the shock of Covid-19. Its GDP grew by 7.2 % in Q3 2020, but got hampered in Q4 amid the second wave of the pandemic. Nevertheless, it prevented an economic collapse, laying a sound foundation for the Swiss franc to endure stability. Besides, as of January 2021, Switzerland has kept its daily cases of Covid-19 consistent at around 2,000, much lower than the highest daily increase of 10,000 in November. This also helps to put the Swiss franc in a stable position. These two factors together maintain CHFs recent stability, making it one of the best safe-haven currencies.

Technically speaking, as of early 2021, USD/CHF have seen both the short-term and long-run moving averages, including the 5-day, 20-day, 38-day, 50-day, 100-day, and 200-day moving averages, struggling in the downsides. In January 2021, short-term averages (5-day and 20-day averages) embraced a trend reversal due to a brief rally in the USD, while long-term averages (100 and 200-day averages) remained in their multi-month downtrend. In other words, moving averages failed to support USD/CHF, leaving the pair in the descending channel started from the October high. With that said, USD/CHF is expected to deepen its losses in the immediate future.

Charts: USD/CHF prices in the daily time frame (March 2020 - Early 2021 & Late 2020 - Early 2021)

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