- USD/CHF holds firm as the 0.80 area provides structural support while the pair trades within a broader 0.79–0.81 range.
- Market focus turns to next week’s expected Federal Reserve rate cut and the Swiss National Bank’s sensitivity to franc strength.
The US dollar rallied slightly against the Swiss franc during the trading session on Thursday in the early hours, as the 0.80 level continues to offer a bit of psychological and structural support. Keep in mind that we've been in a larger range, though, and we are essentially in the middle of that range with the 0.79 level offering a bit of a floor while the 0.81 level above offers a ceiling. The 50-day EMA is in the neighborhood as well, so that causes quite a bit of choppiness.
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Next week on Wednesday, most traders expect the Federal Reserve to cut rates, and that has been priced into the US dollar against multiple currencies at this point. Although the Swiss franc is a little bit different in the sense that it is essentially going to be very close to zero as far as rates are concerned. And of course, the Swiss National Bank has recently complained about the strength of the Swiss franc and that they are going to be watching the Forex markets.
Potential for Swiss National Bank Intervention
If there's one central bank out there that will intervene against its own currency rapidly, it's the Swiss National Bank. Because of this, I think the 0.79 level is now the floor in this pair, at least as far as we can see right now. And at this juncture, I think we are in the midst of trying to form some type of larger, rounded bottom. If we can break above the 0.81 level with any type of force at all, that could send this market much higher over the longer term.
I like buying dips in this pair, and you do get paid at the end of every session to hold it. So it worked out quite well for me. I've been long in this market for quite some time and will remain so. I have no interest in shorting. And I do think that if we were to break down below the 0.79 level with any type of force that has the Swiss starting to react, which will turn the market right back around.
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