- The USD/CHF pair remains trapped in a long-term consolidation, with potential bottoming near 0.79.
- A breakout above 0.80–0.81 could trigger a strong rally, while the upcoming FOMC meeting may act as a major catalyst.
The US dollar has gone back and forth against the Swiss franc during the trading session on Tuesday, as we continue to bounce around in the same consolidation area we’ve been in for a while. This is a pair that I keep paying attention to, mainly because I believe that sooner or later, we’re going to see a massive move, and I do think we’re in the midst of trying to find the bottom.
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If we do, in fact, find that bottom near the 0.79 level, this could be a trade worth holding for two or even three years. Granted, that’s a massive swing trade, but the forex market often trends in one direction for that length of time. Furthermore, it’s important to remember that although the Swiss franc is considered a safety currency, so is the US dollar.
In times of good news, the US dollar typically rallies against the Swiss franc, and we’re starting to see positive developments emerge through trade talks between the United States and China, as well as other geopolitical issues. The Swiss National Bank is also active in this pair, though not necessarily their first point of intervention; their actions in the EUR/CHF market do have a knock-on effect here.
On a Move Higher
If we can break above the 0.80 level, it opens up the possibility of a move to the 0.81 level. Breaking above 0.81 could lead the market significantly higher. Conversely, a breakdown below 0.7850 opens the door to a deeper decline. As long as the euro remains somewhat stable against the Swiss franc, the SNB may not intervene directly, but this pair has been moving sideways since July, which is worth noting.
The US dollar has been strengthening over the last several weeks against multiple other currencies, so if we start to see a broader run to the greenback, a turnaround here is possible. At this point, moving averages are flattening, which can often signal accumulation. A bit of patience likely goes a long way here. The interest rate differential still favors the US dollar, meaning you get paid to wait if you’re long this market, a position I’ve maintained for some time.
Finally, the upcoming FOMC meeting on Wednesday could be a major driver for the US dollar, depending on the tone of the statement and press conference. We’ll have to wait and see how that plays out.
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