The US dollar tried to rally against the Swiss franc on Thursday but gave back gains pretty quickly as we continue to see a lot of noisy behavior.
Ultimately, this is a market that I think is going to favor the US dollar longer term, but we have been rallying quite a bit recently, and we are fairly close to the overall top of the range that we have been in.
So, really at this point, it's not a huge surprise to see a little bit of a drift lower.
Given enough time, I believe this is a market where if we get a pullback, there should be plenty of traders out there willing to get involved and take advantage of it as it should offer value for those who are looking for some type of cheap way to buy dollars. The longer-term USD/CHF outlook for me at least is that we should go higher based on interest rate differential and based on the idea that traders will continue to look at the market through the bond rates and the Swiss hanging on to 0.
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Swiss National Bank Policy and Downside Support
Keep in mind that the Swiss National Bank has suggested more than once that they are more than willing to intervene if necessary, and quite frankly, they will. The market is used to the Swiss getting involved, and therefore they know to take them seriously. It is because of this that I believe there is only so much downside that we have here.
The 50-day EMA sitting just below opens up the possibility of a move to the upside as that should offer support, but I also recognize that choppiness is more likely than not going to be the outcome regardless. I like getting paid at the end of every day. I don't have a huge position in this market at any given moment. It's more or less used as a dividend stock for the way I trade.
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