The US dollar rose against the Swiss franc again on Monday, as we continue to see the interest rate differential play out in this pair.
USD/CHF
The US dollar rallied significantly during the trading session on Monday as it looks like we are now testing the 0.8150. This is an area that I think continues to be a major resistance barrier. This is an area that a lot of people are going to pay attention to, but if we can get above the 0.8150 level, it could open up a huge move to the upside for the US dollar. The next major resistance barrier based on historical information is the 0.84 level.
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Central Bank Policy and the Bullish Flag Breakout
The interest rate differential continues to see the US dollar strengthen against the Swiss franc as the Swiss National Bank is very negative on the Swiss franc and does not want to see it strengthen drastically against other currencies, most specifically the euro, but that does provide a little bit of a tailwind here as well. With the bullish flag being broken to the upside that we had over the last couple of days, it opens up a possibility of a much bigger move.
The 0.8050 level is an area that has previously been support and resistance, so I think this is an area that traders may try to defend. I like this pair, I own this pair, and I add to this pair every time we make a fresh high with a small position.
With this being the case, I am looking like a trader that is going to be adding soon to a position that I've been building over the last several weeks, taking advantage of that swap at the end of every day, and I think over the longer term this could be a pair that makes a much bigger move.
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