- The US dollar plunged in the early hours on Wednesday against the Swiss franc to reach below the 0.91 level.
- However, the market has turned around, which is interesting, considering that the core consumer price index number, month over month, came out at 0.23%, much lower than the expected 0.3%.
In general, this is a sign that inflation is starting to drift a little lower in America, and traders initially thought that perhaps the Federal Reserve was willing to start to look at the market through the prism of easing down the road. That being said, we have turned around completely, and this tells me just how much trouble the Swiss franc is in if we break above the 0.9250 level.
The Upside is Likely to be the Right Way
I think, once we break above 0.9250, you will probably see the US dollar rip higher against the Swiss franc. In fact, a move above that area, for me at least, opens up the possibility of going all the way to the parity level. In the short term though, I think we are just simply bouncing around just below a major resistance barrier. And it is something that we need to pay close attention to because we will have to make a bigger decision sooner or later.
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Even if we were to break down below the lows of the candlestick for the Wednesday session, I think there's plenty of support near the 0.90 level. And then after that, the 50-day EMA, which is just above the crucial 0.89 level. In general, this is a market that I think continues to see a lot of choppiness, but sooner or later, I expect this to be like a beach ball being held underwater. We will break out, and when we do, it'll be quite violent.
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