- The U.S. dollar has rallied ever so slightly against the Swiss franc during the trading session on Tuesday as we continue to see a lot of noisy trading overall.
- I think you have a scenario where a lot of people will be looking at this through the prism of a market that I believe is at least trying to sort itself out.
- The 0.81 level for me at least is the floor in the market longer term.
As long as we can stay above there, we still have a serious possibility of a sideways to upward market. You get paid at the end of every day to hold the US dollar against the Swiss francs. So, there is a little bit of a reward for being patient.
On a Break Higher
But once we break above the 0.84 level, then it’s likely that 0.86 gets targeted followed by 0.88. I have no interest whatsoever in shorting this pair, at least not until we get below the 0.81 level. But quite frankly, this might not be the pair that I would run to. I would short the US dollar against other currencies.
For example, while the British pound is also quite strong, its central bank has not indicated any intention to intervene. That doesn’t mean you can’t short the GBP/CHF pair—it just means the situation is more nuanced.
Recent statements suggest that Swiss authorities are becoming increasingly uncomfortable with the strength of the Swiss franc. Their concern isn’t necessarily tied to the USD/CHF exchange rate specifically, but any intervention by the Swiss National Bank could impact all CHF currency pairs.
So, it’s important to keep that broader context in mind when considering your trading decisions.
I’m waiting to see if we go sideways and then break out. If we do I will have made a ton of money in the process through swap would have opened up a move and then a an addition or two in my trade trying to milk it for everything it offers. CPI coming down on Wednesday will have a major influence on the US dollar so be cognizant of that as well.
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Christopher Lewis has been trading Forex and has over 20 years experience in financial markets. Chris has been a regular contributor to Daily Forex since the early days of the site. He writes about Forex for several online publications, including FX Empire, Investing.com, and his own site, aptly named The Trader Guy. Chris favours technical analysis methods to identify his trades and likes to trade equity indices and commodities as well as Forex. He favours a longer-term trading style, and his trades often last for days or weeks.