The US dropped against the Franc on Thursday, as the jobs report was significantly missed, and this has us watching the big figure of 0.80 below.
USD/CHF
The US dollar fell against the Swiss franc during trading on Thursday as the non-farm payroll announcement came out much weaker than anticipated. The Bureau of Labor Statistics reported that the United States added 57,000 jobs last month instead of the expected 114,000. That has people betting that the Federal Reserve is likely to stay away from tightening, at least not tightening as much as people had feared, and that drove interest rates down during the day just a touch.
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That being said, we still see a big fight in the bond market and, of course, the other side of this equation is the Swiss franc, and this is a currency that has a 0% interest rate policy and a central bank that is more than willing to get involved and start working against the value of its own currency if it does in fact, strengthen too much.
Support at 0.80 and Golden Cross Prospects
The 0.80 level is an area that previously had been both support and resistance going back several months. And now I think you have to look at this as a potential buying opportunity. In fact, we did bounce a little bit from there later in the session, so I'll be looking to get long here as this is a market that clearly has seen a shift in attitude over the last several months and has a lot of fundamentals going for it because even if the Federal Reserve were to keep interest rates fairly stable, they are still sky high in comparison to the Swiss franc.
If we break down below the 0.80 level, then I start watching the 200-day EMA to make sure it offers support with the 50-day EMA getting ready to jump over it, kicking off the so-called golden cross. As far as a target is concerned, I don't really have one, but in the short term, I would probably settle on 0.82. After that, you've got a potential area of 0.85 and 0.88 if history tells us anything. The US dollar has been strengthening against most currencies, and if that pattern starts again, the Swiss franc, of course, will be highly vulnerable.
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