USD/CHF: Swiss Franc demand stays high as Italian uncertainties weigh on markets

• Risk-off sentiment keep the safe-haven Swiss Franc well-bid.
• Italy is set to hold new elections on July 29 compounding the already uncertain situation.

USD/CHF traded as high as 0.9984 in early Europe then reversed course and erased its previous gains to trade at around 0.9920 down 0.15% on Tuesday.

The main theme of the day revolves around the political situation in Italy which is sending markets across the globe in risk-off mode. The Swiss Franc and the Japanese Yen are among the leading G10 currencies as investors are rotating their assets´ holdings to safe-haven currencies.

Italy’s president, Sergio Matarella, has rejected the eurosceptic Paolo Savona as finance minister. Analysts argue that Savona would have pushed Italy out of the Euro if appointed. The Five Star and the League have given up on forming a coalition and the latest news reveal that new elections will be held on July 29. 

Over in Switzerland, the Swiss National Bank Chairman, Thomas Jordan said that the currency markets remain fragile and this was forcing the SNB to maintain its loose monetary policy after the political turmoil in Italy sent CHF on a strong bull run, especially against EUR. More info here.

Meanwhile, adding fuel to the risk-off sentiment were billionaire Georges Soros' comments about the ongoing geopolitical situation “everything that could go wrong has gone wrong" he said. 

On the macroeconomic front, looking further on Wednesday investors will highly pay attention to the Personal Consumption Expenditure Price (PCE) data, which is the favorite gauge of inflation by the Federal Reserve and also to the Gross Domestic Product (GDP). Market participants will gauge whether inflation and growth are on track as the Fed is expected to raise at least three times in 2018. 

USD/CHF 4-hour chart 

The market is pinched between the 100 and 200-period simple moving averages on the 4-hour time-frame suggesting a rather neutral trend. Support is seen in the 0.9885-0.9900 area with a previous swing low and handle followed by the 0.9850 psychological figure. To the upside, the bulls will likely meet resistance at 0.9950 and the parity psychological level.