The US dollar continues to find buyers on dips against the Swiss franc, as the carry trade is still in effect.
USD/CHF
The U.S. dollar initially fell during the trading session on Tuesday against the Swiss franc but has since seen a little bit of a push to the upside. The market looks as if it is forming a bit of a hammer, and it does look like the interest rate differential between the United States and the Swiss franc continues to favor the upside.
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The U.S. dollar is currently dealing with a Federal Reserve that is more hawkish than anticipated, while the Swiss National Bank is currently stuck at 0% interest rates. Quite frankly, it is hard to imagine them changing that. The one thing that could have the Swiss a little bit tighter might be energy inflation, but really, at the end of the day, if it gets that bad, it is very likely that the Federal Reserve will continue to hike as well, and the interest rate differential probably stays pretty much the same.
The 0.8250 level is an area that could be a little bit of a barrier.
If we can see the market break above there, then you could be looking at the 0.83 level as a barrier and maybe even a target. The 0.8150 level currently looks like support, as the 50-day EMA is racing to that level as well.
We have recently seen a huge shot higher in the U.S. dollar against the Swiss franc, so this little bit of a pullback offers value that longer-term traders might be taking advantage of, and certainly look to be doing so early during the session. This is not to say that we cannot pull back, but even if we did, I would only look at that as more value being offered in the U.S. dollar.
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