CHF/JPY Forecast: Swiss Franc Continues to Grind Against the Japanese Yen

Swiss Franc grinds against Yen, showing hesitation. Focus on 170-172 yen range for potential breakout. Interest rate favors Franc, with upside to 175 yen for longer-term trends.

  • You can see that the Swiss franc initially tried to rally against the Japanese yen on Friday but then gave back gains to show signs of hesitation.
  • I think at this point in time it has become somewhat obvious that the market is sideways but that makes a lot of sense.

This market serves a function that a lot of retail traders don’t pay attention to and that is to give you an idea of where the funding currency is going to be. In a situation like this, it tells you that both the Swiss Franc and the Japanese yen are going to be extraordinarily weak, which of course is not a huge surprise. But I think ultimately the prize is going to be the 172 yen level above.

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If the Swiss Franc can break above there, then we probably see the Japanese yen get hammered by almost all currencies. From a technical analysis standpoint, 170 yen is worth paying attention to because not only is it a large round number, but it is also where we have the 50 day EMA hanging about. So, I think this could be a little bit of a sleeper trade on a pullback to buy, expecting that the trend overall will continue to the upside.

CHF/JPY Forecast Today - 26/02: Franc-Yen Steady Grind (Graph)

If we can break above the 172 level, then I think it opens up 175. At that point in time, I think that you would have more or less a “buy-and-hold” type of situation, as the market has seen for some time. Ultimately, this could give you a great idea as to where the Japanese yen is going overall, and it can be used as a great tertiary indicator.

On the other hand, if you see the Swiss franc suddenly plunge against the Japanese and, it can also make good for a signal that the Japanese yen is either going to strengthen, or perhaps the Swiss franc is in trouble. Either way, I think this is a market that’s important to watch, and for longer-term traders, it’s a slow and steady grind that helps you out when it comes to dealing with volatility. Furthermore, the interest rate differential still favors the Swiss franc, so you do get paid to hang on to this pair.

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