Swiss Franc Falls to Five-Month Low vs Dollar on Weak Trade Data, GBP/CHF near Two-Year High

The Swiss franc fell to a five-month low against the US dollar and near a two-year low against the British pound on 22 July after data showed Switzerland's trade surplus too shrank to a five-month low, after hitting an 18-month high in May.

USD/CHF rose to 0.9016 from 0.8980 at Monday's close, weakening the Swiss unit 0.4%.

The trade surplus fell to $1.38bn from $2.85bn while analysts had been expecting $2.82bn, data showed Tuesday.

The Swiss franc has been on a weakening trend since end-June, and so far in July, it is the second worst performer among the eight most actively traded currencies. See an illustration by Finviz.com below.

The franc is 0.70% weaker until today this month next to the euro's 0.90% drop, the worst performer.

Narrowing trade surplus will weaken the currency fundamentally and in the case of francs, its safe haven appeal will be affected at a time of rising risk averse flows globally.

Increased geopolitical uncertainty, following the downing of the Malaysian jet MH17, which is underpinned by the ongoing Middle East conflicts, has strengthened the safer assets like the dollar, gold and yen.

EUR/CHF rose to 1.2155 from Monday's close of 1.2144 and GBP/CHF to 1.5387 from 1.5335. The franc had fallen to a two-year low of 1.5405 on 16 July, which now seems an easy target.

Technical Outlook

The pair is now trading above the 23.6% Fibonacci of May 2013 to March 2014 selloff and testing the resistance line of 0.9020-0.9040.

A break of that will open doors to 0.9080 and then the 38.2 level of 0.9130. Next level on the higher side is 0.9275, a break of which will confirm the reversal of the year-long downtrend.

On the downside, the pair has a stop of 0.8900 ahead of 0.8860. The next level will be 0.8780 ahead of a retest of the March low of 0.8700.