US traders were quite surprised to find USD/CHF at the lofty heights of 1.2430 when they arrived at their desks, so they did what any reactionary inter-bank trader would do hit the bid. USD/CHF has not survived in this rarified atmosphere for the past week; with gold still looking perky and precious metals strategists calling for $700 per oz, USD/CHF dropped to 1.2415 before eliciting any support.
Early pressure on EUR/USD emanating from Chicago, who sold around E50mn at the open-modest but directional has helped USD/CHF rally back to 1.2425. Tech traders note that the top of today's European action 1.2439 coincided with the 20-day moving average, however the lows have been supported by the 100-day at 1.2380 and the 200-day below that at 1.2365.
Whilst traders remain bearish USD, this pair will struggle to earn higher highs, and exotic option barrier defence at 1.6290, ahead of the 1.6300 triggers is also capping topside potential. If USD/CHF is to breaks higher either the option defence has to fail, or EUR/USD has to drop.
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