The Swiss franc extended the advance from the previous week and is the best performing currency against the greenback on Monday, while the New Zealand dollar retraced Friday’s advance following the shift in market sentiment. The Swiss franc extended the advance from the previous week and is the best performing currency against the greenback on Monday, and the shift in market sentiment may continue to benefit the franc as investors scale back their appetite for risk. The USD/CHF is nearly 100pips lower on the day after moving 82% of its average true range, and there seems to be limited room for another break to the downside as the 30-minute RSI bounces back from oversold territory. At the same time, there seems to be a bullish divergence formation in the relative strength index, and we may see a corrective retracement going into the Asian trade, which could lead the dollar-franc to cover the gap from the 120-SMA at 1.0976. However, as risk trends continue to dictate price action in the foreign exchange market, a further drop in risk appetite could drive the exchange rate lower and lead the USD/CHF to break below 1.0800.

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