- The US Dollar has fluctuated against the Swiss Franc, but over the past few months, it has quietly rallied, likely slipping under the radar for many observers.
- This currency pair is particularly intriguing because, despite the Federal Reserve cutting rates, U.S. bond markets remain unaffected, with American interest rates continuing to climb.
- Meanwhile, the Swiss Franc, known as a safe-haven currency, offers extremely low interest rates, making it a prime candidate for carry trades.
Furthermore, we have to worry about a land war in Europe, and while Switzerland is considered to be safe and neutral, the reality is a lot of people will want to get their assets as far away from that as possible. Crossing the Atlantic into an economy that is actually outperforming most others makes a lot of sense. So not only do you get paid at the end of every day to hang on to this USD/CHF pair, but most people are actually trading this pair to move money out of Europe and into North America.
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In fact, you can see the Canadian Dollar, although not as strong, showing somewhat similar trends against the Swiss Franc. It had a little bit of a pullback, but it looked well-supported. I think people would rather just put money in North America right now. The difference between Canada and the United States is this: the United States has advantages above Canada, so it will continue to attract most of the money.
I do think that we're in a bit of a consolidation phase, though, because breaking above the 0.88 level, and the 200-day EMA, took quite a bit of effort. Short-term pullbacks, I believe, continue to offer buying opportunities, and it's very possible that we eventually get to 0.90 Swiss Francs. After that, you'd be looking at 0.92, and at that point, I think you have massive resistance.
I have no interest in shorting this pair anytime soon, as the momentum remains strong, and the fundamentals back up the US Dollar's dominance over the Swiss Franc.
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