- The US dollar has gone back and forth during the trading session against the Swiss franc on Wednesday, but it does look like we are trying to eke out some gains.
- This is a market that has been consolidating for a while in something that looks like a bullish flag, so we'll have to wait and see.
- All things being equal, the market pulling back does offer quite a bit of support near the 200 day EMA just below the 0.88 level.
I also recognize that you have two central banks that are in two different worlds right now you have the Federal Reserve which is going to cut 25 basis points and more likely than not stop you have the Swiss who could possibly not only cut at the next meeting which is actually in about 12 ish hours, but it also is in a situation where they may very well go negative with their rates.
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Moving Forward in this Pair
If that's going to be the case, you will continue to get paid to hang on to this USD/CHF currency pair and therefore I like the idea of owning it. I also recognize that a short-term pullback could be a major issue and if we do pull back a bit then I might be looking to take advantage of two greenbacks.
If we break down below the 0.87 level, then we have to reassess the entire situation. But from a fundamental standpoint, it makes a lot more sense to own the US dollar than the Swiss franc, mainly due to the fact that although the Swiss franc is a safety currency, Switzerland relies on Europe for about 85% of its goods being exported. That's not a good place to be in this kind of environment. At this juncture, it appears that the European Union will continue to see a lot of money running from it.
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