Here we are again seeing interest rates rise in America and thereby driving the US dollar higher against pretty much everything.
The Swiss Franc won't be any different, although some people will claim it's a safety currency and it often is, but right now with the interest rate differential being wide enough to drive a truck through, it's pretty hard to get overly aggressive with the Swiss Franc.
In fact, it's basically a 4% difference in the 10-year yield. So, in this environment, I do think that the Franc eventually gives it up and the US dollar goes racing towards the 50-day EMA. After that, I would expect the 0.79 level. That being said, things are stubborn and of course most of what's moving the markets these days will be old men on Twitter or in a news dispatch trying to throw the market and the world into disarray as it is a big psychological game.
Interest Rate Differentials Drive Market Sentiment
Oddly enough, as this is going on, it's having less and less influence on the financial markets and I think that's something worth paying attention to. If that's going to be the case, then eventually we will break out to the upside because quite frankly nobody wants to pay the swap differential here and it is quite large.
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With that being said, I remain bullish of the USD/CHF pair, and I do think eventually we will go higher. That isn't to say that we can't pull back, I just would like it to hang on to get paid at the end of every day and then move on. I do believe eventually we will try to get to the 0.80 level.
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