- The US dollar strengthened against the Swiss franc on Monday, testing the key 0.81 level.
- With support near 0.80 and resistance at 0.8150, the pair remains range-bound but biased higher amid SNB intervention talk and favorable rate differentials.
The US dollar rallied against the Swiss franc during trading on Monday, testing the crucial 0.81 level. The 0.81 level is an area that I think a lot of people are going to be seeing, as it is the top of overall consolidation at the moment. If we were to break above the 0.8150 level, then you could see some real follow-through as we would be looking to take out the 200-day EMA, which obviously would be a very bullish turn of events.
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Short-Term Pullbacks
Short-term pullbacks at this point in time end up being buying opportunities, with the 0.80 level offering support backed up by the 50-day EMA, and the 0.79 level offering support based on price action. On Sunday, the Swiss National Bank suggested that they were ready to intervene in the currency markets if needed but would prioritize rates. Swiss National Bank Vice President Petra Schleiden signaled willingness for FX interventions amid Swiss franc strength but emphasized interest rates as the primary tool.
This could help stabilize Swiss franc volatility against both the euro, which is its main concern, and here against the United States dollar. Ultimately, this is a market that probably breaks out, and the interest rate differential does favor the US dollar. But it may take some time. If nothing else, we are going to stay in this range. I don't think we break down significantly, and there is an argument to be made that not too long ago, the Swiss may have intervened against the euro, as we had a very suspicious-looking massive hammer form. Over the longer term, I fully anticipate that this market will break higher, but keep in mind that this is a slower-moving pair, so patience will be needed.
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