The US dollar rallied against the Swiss franc on Monday, as the interest rate differential favors the US dollar over most currencies. The Swiss franc is often used as a carry trade currency, and most certainly here.
USD/CHF
The US dollar rallied against the Swiss franc during the trading session on Monday, as we broke above the 0.8050 level, an area that I think probably opens up the possibility of a continuation to the 0.81 level. Keep in mind that this is a market that is very choppy to say the least, and I do think that short-term pullbacks open up the possibility of value.
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Golden Cross Triggers Bullish Outlook
We have the 50-day EMA crossing above the 200-day EMA, which allows a so-called golden cross to fix. A golden cross is likely to be seen as a major bullish signal. If we continue to see plenty of buyers, then I think you will see more of the carry trade play out. After all, the Swiss franc is a currency that offers no interest rates behind it, and of course, the Swiss National Bank is more than willing to get involved and work against the value of the Swiss franc if it gets too strong.
At this point, we had seen a major breakout above the 0.80 level. We have since pulled back to that area and then started to bounce. At this point, I think it's probably only a matter of time before we go looking to a much bigger move. The ascending triangle that we just broke out of measures for a move to 0.84, and I don't see anything in this pair that tells me we can't get there. It doesn't mean that we get there very easily, it doesn't mean that we get there very quickly, but I do think we eventually make that move. I'm a buyer of each dip.
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