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USD/CHF rises ahead of the ECB rate decision

FXStreet (Mumbai) - The direct correlation between the EUR and the CHF came into play ahead of the ECB rate decision, due to which the USD/CHF pair spiked to a session high of 1.0254 levels.

CHF to mimic EUR?

The odds of the Swiss Franc moving in line with the EUR are high, since the EUR/USD and USD/CHF pair have had a strong inverse correlation (direct correlation between EUR and CHF) since mid-October. Draghi’s hint of more easing in December scared the investors out of the EUR, but also triggered speculation that the SNB would retaliate. Consequently, the USD/CHF pair witnessed an 800-pip rally.

The ECB is widely expected to cut the deposit rate by 10bps and introduce a minor tweak in its QE program.

USD/CHF Technical Levels

At 1.0245, the immediate resistance is seen at 1.0260 (Nov 25 high), above which the gains could be extended to 1.0307 (previous day’s high). On the other side, support is seen at 1.0220 (Nov 18 high) and at 1.0179 (previous day+daily low).

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