The US dollar initially fell against the Swiss franc, continuing the selling pressure that we had seen during the previous session, but has since bounced to test the 200-day EMA.
Interest rates in America are rising during the session, and of course, on the other side of the coin here, we have the Swiss and their zero-rate interest policy continuing to work against the value of the Swiss franc in general.
There has been a little bit of a recovery here today after on Wednesday it was announced that the US Treasury would be doubling its purchases of 30-year bonds, thereby having the market think quantitative easing, or worse yet, some kind of serious problem in the financial system.
Dollar Tests 200-Day EMA as Carry Advantage Remains
So, interestingly enough, the Swiss franc was the best performer during the Wednesday session, which makes sense. If there's some type of financial crisis, a lot of times people run to Switzerland.
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That being said, there have been several comments made since then, and it appears that the USD/CHF market may have been a little overdone if Scott Bessent is to be believed. Nonetheless, we find the US dollar sitting right at the 200-day EMA against the Swiss franc, and the positive carry at the end of every day is still enticing to me.
Probably looking at a bullish market waiting to happen, we'll just have to wait and see. There are going to be some very volatile moves ahead, maybe not necessarily in this pair directly, but in markets in general, as we still have a lot of the concerns coming out of the Middle East and monetary policy. The Federal Reserve is now expected to do no interest rate hikes between now and the end of the year, but we have Fed members out there openly calling for them. So, there is a showdown coming. I remain bullish here.
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