- The US dollar has been all over the place during the course of the trading session on Wednesday, as we continue to see a lot of noisy behavior. All things being equal, this is a market that is fighting a lot of sideways action, with the 0.80 level above offering resistance, but also the 0.79 level underneath the current action offering significant support.
- I start to question whether or not we are trying to find some type of bottom here, which obviously is a very noisy time of a market.
Technical Analysis
The technical analysis in this market is very sideways, as the 50 Day EMA above is sitting just above the 0.80 level, and offering a bit of a barrier. That being said, if we can break above the 50 Day EMA, it would be bullish in the US dollar could go looking to the 0.81 level above, possibly even higher than that. On the other hand, if the market were to pull back from here, the 0.79 level would be a significant floor in the market and breaking down below that level would open up fresh selling.
The interest rate differential between the United States dollar and the Swiss franc still favors the USA, and I also recognize that if you are holding onto a long position in this market, eventually you are going to make money, assuming that the market so move too quickly. This is a pair that tends to be very quiet, so I think a lot of carry traders are getting involved here. Ultimately, I do believe that we probably turn things around as we have seen the US dollar fight back against many other currencies, so the Swiss franc of course will be any different than the British pound, the Euro, the Canadian dollar, etc. The US dollar obviously has been very for some time, but as long as it continues to fight, it’s likely that we continue to see quite a bit of choppiness here.
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