The Canadian dollar initially rose against the Swiss franc on Tuesday, as the interest rate differential continues to play out. That being said, the markets are also facing a lot of gravitational pull after a big move higher.
CAD/CHF
The Canadian dollar initially rose against the Swiss franc on Tuesday but has given back some of the gains as we are starting to see a little bit of exhaustion come into a market that, quite frankly, may have been a little overstretched.
Ultimately, this is a market that if it does pull back from here, the 0.58 level is an area that I anticipate could be support. We've recently had the so-called golden cross with the 50-day EMA breaking above the 200-day EMA. That's a longer-term bullish signal, and it does suggest that momentum has finally broken out to the upside for a longer-term move.
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We are hovering right around a couple of major swing highs going back to the beginning of December of 2025 and September of 2025. If we can continue to climb from here, this will have been a major rounding bottom that has supported the market. And quite frankly, I see this across a lot of franc-denominated pairs.
Technical Outlook and Central Bank Policy
So, I think this is less about the Canadian dollar and more about the Swiss franc, although the Canadian dollar will get a little bit of a boost because of all the chaos in the oil markets.
But at the end of the day, improving economic numbers in Canada while the Swiss National Bank hangs on to a 0% interest rate policy sets this up as a pretty straightforward type of market.
Unless we get some type of major de-risking all of a sudden, and that is possible, this is a pair that I remain very bullish on. I don't like the franc regardless. I'm not overly bullish on the Canadian dollar, but relatively speaking, this is continuing to offer an enticing possibility.
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