- The US dollar has rallied slightly during the trading session on Friday, but it does continue to find a little bit of trouble against the Swiss franc.
- Because of this, I think you get a situation where the market is trying to do everything it can to build a base so it can break out.
What is interesting is that the Swiss franc is getting crushed against almost everything, but the US dollar doesn’t seem to be joining the party. For example, the British pound and the Australian dollar both have truly taken off to the upside. Because of this, I do think that eventually the US dollar could join the party, but it is worth noting that the US dollar is a bit of a laggard at this point.
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Technical Analysis
The technical analysis for this pair is obviously bullish, especially as the 50-Day EMA now sits above the 0.90 level. The 0.90 level of course is an area that I think a lot of people will be paying close attention to, as it is a large, round, psychologically significant figure, and therefore will attract a certain amount of attention in and of itself. If we were to break down below there, then it’s possible that the market could go looking to the 200-Day EMA, which of course is a major indicator.
The interest rate differential most certainly does favor the United States, so therefore I think it does make a lot of sense that US dollar continues to strengthen over the longer term. That being said, it doesn’t necessarily mean that it will be a very easy move to happen, and it’s also worth noting that the 0.9250 level above has been a huge barrier. Breaking above that would send this market into a much bigger move, but I think it’s going to take a lot of effort to actually make that happen. Regardless, I don’t have any interest in trying to short this market, because you pay for the privilege to do so. In general, this remains a “buy on the dips” type of scenario.
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