The Australian dollar has spent years in retreat against the Swiss franc, but the technical picture now suggests that the losing streak may be running out of steam. Get a look at the day ahead in European and global markets with the Morning Bid Europe newsletter. Sign up here.
On Friday, the Aussie closed above a descending trendline stretching back to its 2012 high, and is pushing toward its 200-week moving average near 0.5711, according to data supplied by LSEG. A trendline connecting a series of lower highs helps define a bearish trend, with a close above one signaling that the slide may be losing momentum.
The move is being driven in part by divergent interest rate policy. The Reserve Bank of Australia has been raising rates this year, with markets pricing in the possibility of a further increase, while the Swiss National Bank has kept rates near zero and is expected to hold steady, making the franc less appealing to hold. The pair had been stuck near 0.56 since April before breaking higher last week. A double bottom formed by lows in March and October last year set the stage for the rally that has now carried the Aussie to the cusp of its 200-week average. History suggests a weekly close above that average could lead to a push toward 0.59 at minimum, with the market likely to target the 0.6081 to the 0.6099 range, which includes the May and July 2024 highs, and potentially as high as 0.70.
Failure to break through, however, could revive the bearish trend, with initial support near 0.5540 and then the double-bottom lows near 0.5. What the chart shows:
