So who didn’t see this coming?

The Swiss National Bank (SNB) is exactly asleep at the wheel, but the franc was weakened (buoying the USD/CHF) as traders and investors waited for the action that never came. At least not yet. This has opened the dollar for the franc to continue to moving higher as traders feel that the talk is not being backed up by action.

The SNB talked a good game, in fact a great game, but talk can only keep bulls at bay for so long. After what has been an epic short squeeze for USD/CHF sellers, the franc reached resistance in the form of two consecutive highs, one at 0.8132 and 0.8141 before sinking lower towards what could be a test of the 0.8000 major psychological level.

 The daily USD/CHF may be ready to move lower into the trading range as the lack of SNB action has emboldened franc bulls.

The daily chart shows that the sideways range could be ready for a move lower as the pair appears  overbought. Confirming the weakness with the recent rejection and the shifting sentiment in the franc could mean more potential downside.

The backdrop of all this price action is the Swiss government’s plan to spend 870 million francs to stimulate the economy by encouraging tourism, exports, and jobs. This all in an effort to weaken the currency. Earlier this month, the SNB lowered borrowing cost to zero.