- The US dollar has really taken off during the trading session on Monday against the Swiss franc as interest rates in America have perked up a bit, thereby increasing the swap.
- And also, we have had Donald Trump come out and suggest that he was in fact going to raise interest rates on Japan and South Korea on August 1.
- So, this is a situation where I think a lot of people are running to the dollar due to the interest rate differential as bonds sold off.
The Swiss franc is considered to be a safety currency. So, I don't know how much it gives up. But it is interesting that the 0.79 level has in fact shown itself to be rather supported. It is an area that's mattered in the past. And if we can get above the 0.80 level, that would be a major psychological victory for a U.S. dollar bulls as it is a large round psychologically significant figure and an area that obviously probably has a lot of options involved in it. If we get above there, then the 0.81 level is the next major barrier.
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Anything above could change the entire trend over time. Now, we are still very much in a negative trend, but a little bit of a bounce seems to be what we're about to see here. Again, though, if we can break above that 0.81 level, then I would be truly impressed with the uptrend. And I think we've got a situation where you probably buy and hold.
Remember, you get paid at the end of every day to hang on to this pair. And with the interest rates spiking in America, that's only going to help that trade. Although it is a very difficult environment to be in. And therefore, the Swiss franc probably does okay against other currencies. You probably see the U.S. really pound other currencies than the Swiss franc. We certainly have seen it in the Japanese yen today.
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