Dollar Index Trends Up But A Pause Is Possible

Monthly Chart Indicates Pause in Uptrend

Fig 1.

For the month of August 2018, the dollar index made a shooting star pattern (see Fig 1). The shooting star is a bearish reversal pattern that occurs after a rally. The index has been rising since making a low of 88.15 on February 16, 2018. So even though the rally has not been going on for long it is approaching the 24-month simple moving average, which may act as a resistance, and ay induce a retracement..

In October 2014, the index broke above a symmetrical triangle that was in effect since March 2008. The height of the triangle is approximately 18.7 points and the breakout was near 86.00. The 100% extension target is near 104.7 and the index reached a high of 103.8 in January 2017.

The index also seems to be making a broadening pattern since March 2015. The top made in March 2015 at 100.78 coincided with market’s the second ‘taper tantrum’ due to the imminent Federal Reserve’s rate hike. The RSI, MACD and Stochastic also made multi-year highs. The index then declined, which was stopped in August 2015 near 92.50, which was a previous resistance level. The index rose and tested the March high by reaching 100.60 following the Fed’s rate hike in December 2015. The decline from that level was again reversed near 91.88, the previous resistance turned support level, in May 2016.

The index rallied from till January 2017 and reached a high of 103.815, which also coincided with the 61.8% Fibonacci retracement f the decline from a July 2001 high of 121.29 to a April 2008 low of 71.05. This was also near a congestion / high level made in August 1998. Even though the index made a higher high the technical indicators – the RSI, Stochastics and MACD – did not, and hence formed bearish divergences. The volume was lower too. The confluence of these – strong resistance levels with bearish divergence in lower volume – resulted in the index breaking the support levels and decline to 88.15 by February 2018, when the Stochastics made a bullish divergence.

The price action since March 2015, is also emerging as a broadening formation, which is a bearish pattern. This pattern will complete if and when the index breaks below the February 2018 low before breaking above the January 2017. Till either of those events occur, there is a higher probability of sideways movement on the monthly timeframe and since the trend before the broadening pattern was up the bias up.

Another sign for caution is that the uptrend line on RSI from low in March 2008 was broken in early 2017 and the RSI is still below the downtrend line from the March 2015 high.

Weekly Chart Indicates Potential Congestion Area With Up Bias

Fig. 2

The dollar index’s weekly chart also supports some of the inferences from monthly chart but it also shows an up bias. On weekly timeframe, the index broke above a downtrend line from the high of January 2017 during the week of April 30, 2018. However, it is facing a resistance at 89-week SMA, which also coincides with a congestion zone that occurred from February 2015 to October 2015 and then again from February 2016 to November 2016 (see Fig. 2).

The index broke above a symmetrical triangle, that was forming since early June 20010, during the week of September 2014. The 100 % extension target was near 99.25 and the 161.8% extension target is near 109.25. The index reached the 123.6% extension target near 103.50 during the week of December 2016 and then retraced the 50% for the rally from the low of 72.86 reached in the May 2011. This also coincided with the 61.8% Fibonacci retracement level from the low of the May 2014, which was a break out from a congestion zone that started in from January 2012. This level is also near the highs reached in November 2008, March 2009 and June 2010, which are acting as support. This makes the support zone near the lows reached in February 2018, from which the current rally started a strong support.

For the week ending on August 31, the index made a hammer or dragonfly pattern with very small upper shadow and real body and a very large lower shadow. A break above the candle’s high of 95.23 will prolong the rally from the lows of 88.15 reached during the week of February 12, 2018. On the other hand, a break below its low of 94.34 will take it to the support level near 93.10.

Daily Chart Indicates Continuation of Congestion

Fig. 3

Dollar Index made a high on 96.865 on August 15, 2018 within a previous congestion zone mention in the weekly chart analysis. Since then it has retraced back to another congestion zone, which lasted from May 9 to August 7 2018 and resembled a handle of a cup-with-handle pattern. The cup was formed October 27 2018 high to February 16 low to May 29 high (see Fig. 3).

The candlestick line made on August 15 was a doji, which with the next few days’ price-action resulted in an evening star. The %K also made a bearish divergence. Following these bearish indicator reading, the index fell to 94.34 by August 28. The bounce since then is facing a resistance at a previous high. The bias still remains to the down side with a potential support at 94.34 followed by next support at 93.19.

The Key Levels

There are many factors that are making the dollar index rise including strong U.S. economy, Fed tightening and weakness in emerging market. The technical chart of the index are reflecting that up pressure, however, the charts are also indicating short-term pause or retracement. The key support zones are  levels between 94.34 and 93.19. The key resistance level is near 96.86.

 

 

Emerging Chart Patterns and Targets In Forex World

Dollar Index

Chart 1

The U.S. Dollar Index, DX #F, has been declining since January 2017 when it reached the highest level since 2003 (Chart 1).

During 1990s, the index has risen from a low of 78.43, in 1992, to a high of121.90 in 2001. The up trend reversal occurred after a near triple bottom pattern – two other lows occurred in 1991 (80.60) and in 1995 (80.14). The top in 2001 also made a near double top pattern, the other high was in 2002 of 120.80.

After 2002 the dollar declined to 71.205 by 2008. It nearly tested that low in 2009 by reaching a low 74.21 in 2009 and then 73.015 in April 2011. It then made a reversal. Between 2008 and 2014, the index formed a symmetrical triangle pattern with a high of 89.71 and a low of 71.05. The breakout was near 86.05 level, giving us a target near 104.71.

The 61.8% Fibonacci retracement level of the 2003-to-2008 decline is 102.098. The high point reached in January 2017 is 103.815. Also, on monthly chart, the MACD is showing a divergence in January. The price made a high but the MACD did not. All of this chart patterns and technical indicators point to at least a consolidation if not the trend reversal.

Weekly and Daily Timeframe

Chart 2

Chart 3

The weekly chart of the Dollar Index gives us more information (Chart 2). From January 2015 to November 2016, the Dollar index traded within horizontal channel that was bounded between 100.785 and 92.52. For most of the 2015 the market was expecting a Fed Funds Rate hike, which was keeping an upward pressure on the dollar. However the expectation of rate hike was not sufficient for the index to over come the psychological resistance of 100.

The initial rally stopped March 2015. In August index touched the low of 92.52 before getting another upwind. Despite getting the expected first rate hike in December, the index again could not over the resistance. It finally broke through the resistance in the wake of U.S. presidential election and on the eve of next Fed Funds rate hike in November 2016. The break to the upside did not last long and by the first week on 2017, the index had started on it move down.

In January 2017, the 14-week RSI made a divergence – index made a high but the RSI did not. In late January, RSI broke below an uptrend line from the low of April 2016. The index followed through in early May and broke below its uptrend line during the same period. The RSI is below an downtrend line since December 2016. Usually a trend line on RSI breaks before price (but not always). This indicates that the weakness on dollar is going to last.

The daily chart (Chart 3) corroborate the weekly chart analysis. It also shows the next support level near 95.90 level. The next support levels are near 94.00, the August 2016 low and 91.88, the May 2016 low. On May 23 , the Dollar index closed at 97.264 first support is 1.364 points or 1.4% away.

EUR / USD

Chart 4

Chart 5

On weekly time frame (Chart 4), EUR/USD is making a down sloping flag, which is usually a bullish pattern. Euro made a low of 1.04590 in mid-March 2015. It later breached that low and made another low of 1.03524 in mid-December 2016. Since then it is making higher highs and higher lows. It has moved above 89-week SMA. The next resistance is near 1.16163, the May 2016 high and then 1.17140, the August 2015 high.

On Daily timeframe (Chart 5), the Euro made an ascending between November 216 and April 2017. In late-April it broke above the triangle before testing the break in early May. Since then it has broken to the upside.

The height of the ascending triangle is nearly 533 PIPs. The break out is near 1.08736. The 100% extension target of the pattern is near 1.14070 and the 161.8% extension target is near 1.17365. On May 23, EUR/USD closed at 1.1837. First target is 430 PIPs away.

GBP / USD

Chart 6

Chart 7

Following June 2016 Brexit referendum, British Pound broke through multi-year lows. It extended that decline in October and made a low of 1.1950 against the U.S. dollar, its lowest level since May 1985. The weekly chart of GBP/USD shows that the low of July, 1.2798, acted as a resistance till April 2017 (Chart 6).

On Daily time frame (Chart 7), GBP / USD formed a symmetrical triangle from October 2016 to April 2017 The high point of the pattern is 1.2775 and the low point is 1.1950, giving us a height of 825 PIPs. The break above the pattern occurred near 1.26390 on April 18. The 100% extension target of the pattern is near 1.3450 and the 161.8% extension target is near 1.39750 level.

The next resistance is near 1.3445, the high of September 2016. The resistance following that is near 1.3836, the low of February 2016. On May 23, GBP/USD closed at 1.29620. The first target is nearly 800 PIPs away.

USD / JPY

Chart 8

Chart 9

In October 2011, USD / JPY made all time low of 75.575 (Yen was strongest against U.S. dollar) and then started an uptrend that lasted till June 2015 and topped at 125.856 (Chart 8). That level was near the June 2007 high of 124.150. Yen then moved sideways till January 2016 before declining to 99.003 by June 2016. This was near the 50% retracement of the rally and within the congestion zone created in the second quarter of 2014.

The bounce from June 2016 low took the currency pair to 118.665, which was within the support zone turned resistance zone created by the lows of August 2015 and December 2014.

USD / JPY made a double top at 118.665 in December 2016 (Chart 9). Since then it has retraced close to the 61.8% Fibonacci level making a down-sloping flag. Such patterns are usually bullish and a break above 112.50 will complete the pattern. The rally from June 2016 low to December 2016 high was 1966 PIPs. The low point of the flag is near 108.133, giving us a 61.8% extension target near 120.28 and 100% extension target near 127.79. USD / JPY closed at 111.804 on May 23, which 848 PIPs away from first target.

USD / CAD

Chart 10

Chart 11

In November 2007, the Canadian dollar was at the strongest level against U.S. dollar when USD/CAD made a low of 0.90590. After a bounce up to1.219030, the pair made another low of 0.94070 in July 2011. After that it rallied to 1.46899 by January 2016, its highest level since April 2003.

Following that high, USD/CAD declined to 1.24610 by May 2016, retracing nearly 38.2% of the rally from 2011 lows (Chart 10). Since then the pair has been gradually rising within an up-sloping flag, which is generally bearish in nature. A break below 1.32625, the April 2017 low will complete the pattern. The height of the flag-pole or the decline is near 2200 PIPs. The 61.8% extension target is near 1.12400 and the 100% extension target is near 1.15400.

On Daily time-frame, the USD/CAD is trading within a horizontal trading channel since last-September 2016. The upper limit is near 1,.3600 and the lower limit is near 1.29600. In late-April 2017, the pair broke above the channel only to fall back within it in mid-May. The next support is at 1.32235, the low of April 13 and is 290 PIPs away from May 23 close of 1.35135.

AUD / USD

Chart 12

Chart 13

Chart 14

Just before the 2008 financial crisis, AUD/USD made a low of 0.60090 in October 2008 (Chart 12). It then started a rally that took the pair to 1.10802 by July 2011, its highest level since January 1982.

Between June 2011 and April 2013, AUD/USD made a symmetrical triangle, which it broke in May 2013. The high of the triangle is 1.10802 and the low is 0.98619. The break out is near 0.98400, giving us a 161.8% extension target near 0.71000. In January 2016, AUD/USD made a low of 0.68274.

On Weekly time-frame (Chart 13), AUD/USD is making another symmetrical triangle. At the ,moment it in the middle of the pattern. Upside break would be above 0.77500 and the down side break would be below 0.7300.

The daily chart shows that AUD/USD (Chart 14) is trading within a horizontal channel since April 2016. The upper limit is near 0.77500 and the lower limit is near 0.71450.  At present the pair is near the middle of this channel.

Since March 21 2017, AUD/USD is below a down trend line. After making a low of 0.73288 on May 9, the pair has bounced back up to the down-trend line and is attempting to break above. A move above 0.75173 will complete the break. The upper limit of the patterns is nearly 300 PIPs away from May 23 close of 0.74770.

USD / INR

Chart 15

Chart 16

From November 2011 low of 39.01, USD / INR rose to a high of 69.22 during the 2013 ‘taper-tantrum’. The April then declined to 58.2630 by May 2014, before advancing to test the highs in February 2016 (Chart 15). It made another unsuccessful attempt in November 2016.

Between December 2015 and March 2017, USD / INR trade within a horizontal channel with an upper limit near 68.7850 and a lower limit near 66.210 (Chart 16). On March 13, USD / INR broke below the channel. The 100% extension target is near 63.63 and the 161.8% extension target is near 62.05. On April 24, the pair a low of 63.93.

On May 24 USD / INR closed at 64.52. The next resistance is near 66.21 and the support61.33. near.

Dollar Index Is Making Bullish Chart Patterns

Since the beginning of May 2016, the U.S. Dollar Index has been on an uptrend and making bullish chart pa. It got a fresh boost in November with renewed conviction in an imminent Fed Fund rate increase. Also, fueling the rise is a greater possibility of fiscal stimulus, which would expand the U.S. economy. However, former has more real impact than later.

Rising Fed Fund rate has a direct relationship with stronger dollar. Stimulus has greater probability of adding to deficits and stronger dollar would worsen the balance of payment. Both of these forces weaken the dollar.

Dollar Index In Long Term Down Trend

Chart 1

The U.S. dollar has been in a long term down trend. In May 1985, the Real Trade Weighted U.S. dollar index reached a maximum of 128.437. This resulted in the Plaza Accord between the governments of France, West Germany, Japan, the U.S.A. and the U.K. The result was a sharp decline in the index which lasted till July 1995. The index then rose till April 2002, which coincided with a decrease in federal deficit (red line in the Chart 1), which was leading the dollar index.

The index declined, mostly, from 2002 till June 2011, with a brief rise from April 2008 to March 2009. The federal deficits were increase (falling below zero in the chart) during this time. The federal deficits started to improve after 2009 and since 2011, the index has been rising (Chart 1 is up to October 2016).

Fig. A

One of the reasons for this rise is the increasing odds for a Fed-Fund Rate hike in FOMC’s December 14 meeting. On November 4, the probability of  Fed raising the benchmark rate by 25 basis point was 71.5%. On November 18, the probability had increased to 95.4 (Fig. A).

During this time, the dollar index (DX #F), which tracks Fed’s index very closely, rose from a November 4 close of 97.088 to November 18 high of 101.535, 4.58%, which is significant in currency trading.

Triangle Pattern

Chart 2

On monthly chart (Chart 2), the index fell from a high of 128.18 in 1985, to a low of 78.43 in September 1992. The subsequent rise, from April 1995 to July 2001, took the index to 76.8% Fibonacci retracement level of the decline of 80s and ’90s.

From 2001 to April 2008, the index declined, reaching new lows. The bounce from that low found a resistance at 38.2% Fibonacci level in March 2009. From that time till October 2014, the index formed a symmetric triangle. One touch point of the triangle was the low of 72.86 in May 2011, which was very near the low of 71.05, in April 2008.

Dollar index broke above the triangle in October 2014. The approximate height of the triangle is 15.50 points. The approximate breakout point is 86.00. this gives us a target near 101.50.

In March 2015, the index made a high of 100.785, which is very close to our triangle breakout target.

Horizontal Trading Zone

Chart 3

The dollar index has been trading within a rectangle box since January 2015 (Chart 3). The upper limit is bounded by 100.785 to 100.600. The lower limit is bounded by 92.52 and 91.88. The height of this chart pattern is between 8.905 and 8.08.

With a fresh up leg starting from November lows, the index is attempting to break above the pattern. If the break out is successful, odds favor it, then the target would be near 108.68 and 109.69.

Flag – Scary

Chart 4

On monthly chart, (Chart 2), the rectangle box is following a rally from 72.860, the low of 2011 to 100.785, the high of 2015. This is formation is a flag, which usually occurs in the middle of a move, either up or down. If this plays out according to text-book then the target is near 119.805. A move like that will upset many apple-carts around the world.

However, it also has built-in mechanism to keep the upheaval to a minimum. Stronger U.S. dollar will enable more imports into the U.S.A., which will worsen it balance of payment.

The Trade Balance has led the U.S. dollar quite closely since 1992. Worsening balance of payment (BoP) usually leads to weaker dollar and strengthening BoP to stronger dollar.

 

 

Four Horsemen of Dollar Index

Central banks around the world are highly active. Some, like in Switzerland and Denmark, are working overtime to prevent their respective currencies appreciate too much. Some, like in emerging markets – India, Russia, Ukraine etc. – are fighting to prevent their currencies not depreciate a lot. Then there are others, like in Japan, U.S.A. and EU, who are trying to revitalize or continue to prop-up their respective economies through unconventional measures aka Quantitative Easing. So it is time to take a look at the technical picture.

The 30,000 View or The Monthly Timeframe

Dollar is the reserve currency of the world and it has a major impact on emerging market currencies and on developed market currencies. The tradeable dollar index – there are two – consists of six major currencies, euro, yen, British pound, Canadian dollar, Swiss franc and Swedish krona. The futures for this index trade on InterContinental Exchange (ICE). The other dollar index is the trade-weighted one maintained by the Federal Reserve. Its basket contains currencies from most trading partners of the U.S.A. For this analysis we will take a look at the dollar index traded on ICE.

Dollar Index - Monthly - 02-06-2015Dollar is in a long-term down trend – since 1980s. In between it has staged some sharp rallies. Once, from 1995-to-2001, it almost reached 80s levels. But, for most of the time it has remained close to or below the linear regression line represented by the red downtrend line in the above chart. The two outer bounds are one standard deviation lines.

Only once, from early 2000 to last 2002, did the index stay above the one-standard deviation. It is again reaching that level. The index is in a uptrend since May 2014. This level is also close to the 50% Fibonacci retracement, at 96.17, of the long decline from 2001 to 2008.

The third resistance point is the four-month congestion area formed between October 1998 and January 1999, point X in the chart. The fourth resistance point is formed by the Fibonacci extension of the previous rally, from May 2011 to July 2012. The rally is shown by point A & B on the chart and the extension is from point C. The 1,618 Fibonacci extension is at 95.51.

The chart shows just a significant resistance zone for the dollar index. What it does not tell is whether the index will turn back at this resistance or not. The resistance level could be strong enough to rebuff the advance or the momentum could be strong enough to overcome the resistance. That is why we need to continue to monitor the prices action.

If dollar index breaks through this level then the next resistance is near 102, at the Fibonacci retracement level of 61.8%; Fibonacci extension of 2.382; and the resistance formed by the highs of August 1998. If the resistance holds then the downward move could find a support at the previous resistance at 89 – high made in March 2009 and July 2010.

Whatever You Do, Don’t Act So Fast

Our first horseman is euro – the biggest component of dollar index.

The euro constitutes 57.6% of dollar index, hence its chart mirrors dollar in reverse quite closely, with few variations. Euro has been in a uptrend on monthly timeframe (Prior to euro’s creation, the chart uses the five European currencies – German mark, French franc, Italian lira, Dutch guilder, and Belgium franc – that were part of the index) with moves opposite of dollar.

EUR/USD - Monthly - 02-06-2015The recent move of euro – since May 2014 – is on the down side. As of now it is breaching the lower bound of one standard-deviation. This coincides with the support at the 61.8% Fibonacci retracement of the rally from November 2000 low to July 2008 high.

The current level is also at or just below the support levels created by the lows made in December 2005 (point X on chart), July 2010 (point Y) and August 2012 (point B). The fourth support point is made by the 1.00 Fibonacci extension of the decline from 2011 high (point A) to 2012 high (point B) from the point C.

Unlike, the strength of dollar index’s resistance zone, euro’s support zone seems to be more suspect. It has fallen by almost 300 PIPs below the lowest support made in 2005 at 1.1662. It has also not fully reached the 1.00 Fibonacci extension at 1.0958.

If euro breaks this support then the next significant support is near 103, which is formed by the low of made in 1997 (point Z) and 1.272 Fibonacci extension. A bounce off this level will find resistance immediate above at the previous support levels at 1.18 and 1.20.

Yen, Not To Be Left Behind

The second horseman is Japanese yen, which comprises 13.6% of the dollar index. It is also forming interesting chart-pattern on monthly time frame, a long-term down turn, which means that the yen is appreciating as it is the denominator in this pair.

Japanes Yen - Monthly - 02-06-2015The recent move of the price – since September 2012 –  is up, which means that yen is depreciating.The current level is at the upper-bound of the one standard deviation. It coincides with the 61.8% Fibonacci retracement of the decline from high made in 1998 to the low made in 2012.

This level is also at some significant resistance levels. One is the lows reached in 1987 and 1987 – point V on the charts. Other levels are trading range formed in 2002 and 2003 at point Z; high made in January 2006 at point X; and the high made in July 2007 at point Y.

A break above this resistance level will take the pair to the next resistance zone formed by the 78.6% Fibonacci retracement and the 2002 high of 135 (point P). If the pair fails to clear this resistance and falls down then it may find support at near 105 or point U in the chart.

The Third Horseman – Pound Sterling

The third significant constituent of the dollar basket, at 11.9%, is the British pound. Its chart pattern on monthly time frame is most interesting.

British Pound - Monthly - 02-06-2015Pound is mostly in a trading range – since 1981 – which means that its impact on dollar on the longer timeframe is neutral. Within this long-term trading rage, pound is also making a smaller horizontal channel (L1 and L2) since bottoming in 2009. The current move, from July 2014, has taken the cable to the lower limit of this channel.

The current price is also at the 1.00 Fibonacci extension of the decline from May 2011 high (point A) to July 2013 low (point B) from point C.

Pound’s price action is more biased toward staying within the horizontal channel formed by L1 and L2 than breaking out of it. If it does not break out, then its impact on dollar will be minimal, rather it will be reacting in response or sympathy to moves in other major currencies versus dollar (see next section). If pound breaks below the current level then it may find support at the 2009 lows near 1.40.

Fourth Horseman – The Central Banks

Since the 2008 financial crisis, the major central banks – The Federal Reserve in the U.S.A, Bank of England in UK, European Central Bank in Euro Zone, and Bank of Japan in Japan – have employed a variety of quantitative easing programs. As a St. Louis Fed states in its paper,

The programs initially attempted to alleviate financial market distress, but this purpose soon broadened to include achieving inflation targets, stimulating the real economy, and containing the European sovereign debt crisis. The European Central Bank and Bank of Japan focused their programs on direct lending to banks—reflecting the bank-centric structure of their financial systems — while the Federal Reserve and the Bank of England expanded their respective monetary bases by purchasing bonds.

There are two aspects of current central bank actions – credit easing and quantitative easing. Credit easing policies reduce interest rates. Rates for these four central banks is at zero-lower-bound (ZLB) or zero-interest-rate-policy (ZIRP). Quantitative easing policies unusually increase the size of central bank liabilities – currency and bank reserves. It injects money into the economy. Both types of policies weaken the currency of the central bank.

BoJ was the first one to introduce ZIRP, in February 1999. Federal Reserve reached there in 2009 after cutting rates from above 5% in 2007. BoE reached that range, but at slightly above Fed’s rate, few months after Fed and from a similarly high levels. ECB reached a level slightly above BoE’s rate few months after BoE and from a lower starting level. ECB once raised rates in 2011 only to cut it few months later.

Once central banks reached the ZLB range, their interest rate differential stopped playing a part in the currency movement. However, their QE policies have an impact on the currencies. Other factors that affect the forex rates is the relative strengths of these economies. The present situation is that the Fed has wound down its QE3, although, it is still maintaining a loose monetary policy. ECB is embarking on a QE expansion. BoJ is maintaining its QE policies and may enhance them. BoE is maintaining QE and though some were betting that it could be the first one raise rates, now the thinking is that it may need to boost QE.

The current stance of major central banks is dollar positive – Fed’s policies are favoring strong dollar; ECB’s are leaning towards weak euro; BoJ is weakening yen; and, BoE is at a crossroad. Also, the U.S.A. economy is doing better than other economies, which is dollar positive too.

The technical analysis tells us that the dollar index is reaching a resistance zone with a bias toward an up break or a consolidation. Euro is at or below a support level with a bias toward either a break down or consolidation. Pound is near a support with a bias toward consolidation. Yen is also near a strong resistance (bearish for it) with a bias toward consolidation. The trading strategies for these should be toward their major biases with tight stops.

The Swiss Franking

The Swiss National Bank (SNB) shocked the world with its decision to remove the Euro floor. The franc declined over 15% versus the Euro. Since August 2011, the SNB had been defending the EUR/CHF exchange rate at 1.20 level. It decided to do that after the EU fell in grips of various crises and the franc appreciated 40% against the euro from 1.6800 in December 2007 to 1.007 in August 2011. The bank established the floor only against the euro and not against other currencies; however, the vagaries of forex market ensured that there were effective floors against other currency pairs too.

The impact of this floor was that Swiss exporter were having an easier time as their currency was not appreciating and their high wages were supported by the sales. Despite this the country was having lower inflation and flirting with deflation.

The January 15th, 2015 decision by SNB has created a havoc in the market. The EUR/CHF has fallen through the floor. The dynamics between Swiss economy and other major economies hasn’t directly changed but the impact of Switzerland/EU trade is so much that other currencies have depreciated a lot. Now the Swissy is getting back to it earlier role of a safe-haven along with Japanese yen and US dollar. In times of great uncertainty and fear, these currencies usually defy normal forces of forex market.

Here are some of the weekly charts of Swiss franc with its various trading partners demonstrating the impact of 2011 and 2015 decision by SNB to establish and then remove the floor with euro.

Here is with Euro:EURCHF_150113_WHere is with Greenback:CHF_150113_WHere is with British Pound:GBPCHF_150113_WHere is with Aussie:AUDCHF_150113_WHere is with Canadian looine:CADCHF_150113_WHere is with Swedish krona:CHFSEK_150113_WHere is with Norwegian krone:
CHFNOK_150113_W