AUD/CHF Retracement Amid Seller Weakness
Market Overview
The Australian dollar has shown signs of recovery against the Swiss franc, despite weaker domestic economic data. Investor sentiment has turned more risk-on due to rising speculation about a potential diplomatic agreement between Ukraine, Russia, the United States, and Europe. This shift has diminished the appeal of safe-haven assets like the Swiss franc, providing relief to AUD/CHF, which has been in a sustained downtrend for over a month.
In addition, concerns over global trade disruptions have resurfaced following Donald Trump’s tariff proposals, which could negatively impact economies reliant on exports, including Australia. While the Reserve Bank of Australia (RBA) recently cut interest rates by 25 basis points to 4.1%, its cautious stance on further rate reductions has provided some support to the Australian dollar.
Technical Analysis
On the one-hour chart, AUD/CHF is undergoing a corrective retracement from its month-long downtrend. Buyers have stepped in after the formation of a higher low at 0.56482, creating a short-term bullish structure. The pair is currently challenging the 0.56682 resistance level, and a breakout above this price would shift momentum further in favor of buyers. In that case, the next target lies at 0.56736, aligning with the upper Bollinger Band, followed by 0.56806 and 0.56882, which coincide with a mildly sloping trendline.
Momentum indicators suggest waning selling pressure. RSI is rising, indicating improving buyer strength, while MACD shows signs of bullish divergence, reinforcing the likelihood of further gains.
However, if sellers regain control, initial support lies at 0.56606, with 0.56482 as the key level to watch. A breakdown below this floor would invalidate the recovery scenario and resume the broader bearish trend.
Key Technical Levels
- Resistance Levels: 0.56682, 0.56736, 0.56806, 0.56882
- Support Levels: 0.56606, 0.56482
Fundamental Drivers
Australian economic data has failed to meet expectations. The monthly CPI remained at 2.5% in January, contradicting forecasts of a slight increase to 2.6%. Meanwhile, construction activity grew by 0.5% in Q4, significantly lower than the previous 2.0% expansion and market expectations of 1.0% growth.
Despite the RBA’s recent rate cut, the central bank has signaled a more measured approach to further easing. This stance has limited AUD downside risks. However, global trade uncertainties remain a headwind, with the potential implementation of US tariffs threatening Australian exports.
Conclusion
AUD/CHF is in the midst of a short-term retracement, with buyers testing 0.56682 resistance. A breakout could drive the pair toward 0.56882, while failure to sustain above support at 0.56482 would confirm a continuation of the broader downtrend. Traders will closely monitor risk sentiment and further developments in global trade policies, which could heavily influence the next directional move.
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