The Euro has rallied a bit against the Swiss franc on Friday, as we continue to see a lot of noisy trading in general. With this, it is a market that continues to reflect the “carry trade” at the moment, and one I am still bullish on.
EUR/CHF
The Euro has rallied a bit against the Swiss franc during trading on Friday, as the interest rate differential continues to be a major factor here. Yields around the world have spiked a little bit after the stronger-than-anticipated jobs number in the United States, and of course the swap is still very strong in favor of the Euro against the franc.
Top Regulated Brokers
This is a pair that grinds over the longer term, so a lot of patience will be needed. Recently we've seen better-than-anticipated Swiss inflation numbers, but we're still a long way away from the Swiss National Bank changing its overall attitude and policy. With this being the case, I like the idea of buying dips as the ECB is expected to raise rates another 25 basis points in the next month or so. Whether they do or not, it won’t really change the main theme here, which is the rate differential.
Golden Cross and Key Technical Targets
With this, I ultimately look at this as an opportunity to get long every time we drop, and I think at this point in time, the 0.93 level is essentially your floor. To the upside, the 0.95 level is a reasonable target. After that, we're looking at 0.9650.
We have recently formed a major bottoming pattern. It does look like we're trying to break out of there. We did just recently have the golden cross as well, so with the 50-day EMA breaking above the 200-day EMA, this could be the beginning of something rather special. We'll just have to wait and see.
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