CHFJPY extended gains by +2.05% early Friday morning after the SNB delivered a surprise rate hike on Thursday. The pair climbed to an all-time high at 139.75, marking a historic move for the pair. The SNB raised interest rates by 50bps from -0.75% to -0.25% for the first time in 15 years as soaring inflation continue to bite economic performance. The SNB indicated further rate hikes could follow as they intend to maintain price stability. The SNB joined other central banks in battling against skyrocketing inflation in the near term.
The BoJ remained the outlier among the global central banks as it continues to maintain its rates unchanged. The Japanese yen weakened against CHF early Friday morning as policy divergence widened especially with the BoJ pledging to guide the 10-year bond yield near 0%. The Japanese rate remains at -0.10% and the economic outlook remains uncertain for Japan.
The Trade balance for Japan dropped to -2 384.7B from surveyed -2 022.6B on Thursday. Exports YoY for May came out negative at 15.8% compared to the 16.4% expected suggesting slowing economic activity.
Investors should pay attention to the BoJ Monetary policy meeting on June 22 ahead of the Inflation data on Thursday.
The CHFJPY rallied above 139.00, a 7-year high making a fresh peak at 139.40 level. The pair is strongly bullish and if the price manages to hold above the 139.00, bulls may seek further upside gains towards the 140.000 psychological figure.
The Williams Alligator indicator suggests near-term support at 127.53 if CHFJPY recedes from the all-time high. The monthly candle rallied further upside after breaching the 134.60 which coincided with June 2015 high.
The MACD suggest the pair could trade higher as volume bars increase above the 0.000 mark. The moving averages indicate strong momentum to the upside in the near term.
ActivTrader Sentiment tool suggests that 76% of retail traders are bearish on the CHFJPY. The retail traders could be seeking a peak for the pair as it hit an all-time high at 139.75. CHFJPY has gained 12.72% in the last 6 months trailing against the USDJPY leading with 18.11% during the same period.
However, the policy divergence between the SNB and BoJ could see the pair soaring higher than 139.75. The surprise 50bps hike delivered on Thursday is a significant step for the Swiss Franc in the near term.
The CHFJPY extended gains after breaching the 137.70 level. The pair rose for 2-days straight after bouncing off a 134.60 near-term support coinciding with a Bollinger Band baseline (yellow). A close above the 137.70 could open the possibility of a further rally to the upside.
However, the trend could be reaching an exhaustion point as the RSI indicator suggest the pair is in an overbought region. Traders should expect sharp retracements as short-term traders wind down their positions.
A close below the 137.70 could reinforce a near-term retracement toward the 134.60 level. If the 134.60 level fails to hold price could dip lower towards the 127.50 level.