The US dollar rose against the Swiss franc on Wednesday, as we are looking to determine whether or not we are going to continue the longer-term trend.
USD/CHF
The US dollar rallied against the Swiss franc during the early part of the session on Wednesday, as we continue to see the US dollar strengthening in general. That being said, it is a little bit different here in the sense that the Swiss franc is considered to be a safe currency, and of course, we had the Americans attacking the Iranians, and that had people running to the Swiss franc in other pairs, so there was a little bit of a knock-on move here. That being said, the interest rate differential continues to favor the US dollar, and I think it will continue to be one of the biggest drivers of where we go next. Given enough time I do believe that short-term pullbacks will be bought into, and I am looking at this through the prism of trying to find value.
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Interest Rate Differentials and Key Structural Breakout Levels
If we were to break down below the 0.80 level, then I think you have a more significant pullback ahead, but right now, that just doesn't seem to be where we are going. The market breaking above the 0.82 level opens up the possibility of the 0.85 level, and that of course would signify the Swiss franc probably falling off a cliff against multiple currencies, and that could end up being a market-wide move.
Ultimately, though, I think you have a situation where traders continue to look at the US dollar as a strong currency, and with the rates rising the way they are, I just don't see how that changes. When it comes to the Swiss franc, this is a market that I still favor the US dollar. I've got no interest whatsoever in trying to get too cute here, and if we did start falling here, I would more likely than not look for a US dollar short against a currency that has a little bit more momentum.
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