- The U.S. dollar showed resilience against the Swiss franc after soft CPI data, reinforcing a range-bound but constructive outlook.
- Central bank dynamics suggest downside support, with a longer-term bullish breakout possible if key levels give way.
The US dollar has gone back and forth against the Swiss franc during trading on Thursday, which shouldn't be much of a surprise because, quite frankly, we had a whole slew of economic announcements to get through. The most important in this particular one was probably the consumer price index in the United States year over year, which came out at 2.7 instead of the anticipated 3.1%. This had the US dollar a little soft initially, but since then, we've seen it firm up a bit, and that is somewhat telling. I think the US dollar is stronger than most people realize.
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Swiss National Bank Influence and Range Structure
That being said, this pair is a little different in the sense that the Swiss franc, of course, is considered to be a safety currency, but more importantly, the Swiss National Bank is involved. The Swiss National Bank has made it plainly clear that they do not like the strengthening Swiss franc and they will intervene given enough time or enough pressure. With that, I think there's a little bit of a floor in this market at the 0.79 level, although I'd be the first to point out that it's actually the euro exchange rate that they're worried about more than the dollar. It probably ranks euro, maybe dollar, or British pound. Take your pick.
So, this is a market that you'll have to watch. I think it does have a floor in it, and you do get paid at the end of every day to hold it. So, I remain bullish. I recognize we're in a range. That's fine. You buy on the dip; you sell on the rip. It's that simple.
If we can finally break above the 200-day EMA, which would take multiple days, I anticipate, then this market could really take off. In that environment, you probably see the US dollar screaming higher against everybody else. That's a real possibility in early next year's trading. We'll just have to wait and see. Until then, I'm patient.
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