Potential signal:
- I am a buyer of this pair above the 0.9060 level, with a stop loss at the 0.8985 level.
- I would be aiming for the 0.9133 level for a short-term move.
The US dollar is slightly positive against the Swiss franc during the trading session on Wednesday, as we continue to see a little bit of a bounce, as the 0.90 level has been a major support level. The 50 Day EMA also sits in the same general vicinity; therefore, I think you’ve got a situation where traders are just simply trying to do more of the same that we have done previously.
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In general, this is a market that I think continues to see a lot of back and forth, especially as the Swiss have cut rates rather drastically, while the Federal Reserve is going to stay put with its monetary policy, which of course is fairly tight. Ultimately, I just don’t see a situation where you can bet against the US dollar against the Swiss franc, despite the fact that we might see a little bit of back-and-forth choppiness. After all, you make quite a bit of swap at the end of the day by holding the US dollar against the Swiss franc.
Technical Analysis
The technical analysis in this USD/CHF pair is neutral. That would be looking at through the short term perspective, but the longer term perspective is quite a bit more bullish. I recognize that the 0.92 level above is a major barrier that will be difficult to overcome, but if and when we do, that opens up the US dollar to rally to the 0.95 level, followed by the 1.00 level ultimately. This obviously would be a sign that the US dollar is getting insanely strong again, but one of the first currencies that they might try to short against the US dollar will be the Swiss franc as the interest rate differential is so large.
If we were to turn around and break down from here, the 0.89 level is an area that should be supported, as the 200 Day EMA currently resides there and is rising. I don’t necessarily think that happens, but it is something that I have to keep in the back of my mind as this pair has stretched itself quite a bit recently.
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