- The US dollar fell against the Swiss franc during the trading session on Friday, only to turn around and show signs of bullish pressure, as the market certainly has a lot of support just below.
- With this being the case, traders are paying close attention to the 0.81 level, an area that has been important a couple of times in the past.
- If we can turn around and break above the 0.84 level, then we could see a lot of momentum to the upside given enough time.
That being said, the market continues to see a lot of questions asked of whether or not the US dollar can recover from a longer-term standpoint, but it is worth noting that the Non-Farm Payroll announcement came out hotter than anticipated.
Technical Analysis
The technical analysis for this market is quite bearish, but I also recognize that the massive amount of support that is found in this general vicinity is worth paying attention to. This is a market that continues to see a lot of choppy behavior as we are trying to determine whether or not the 0.81 level will in fact hold for the longer term. If that level does not, then we could drop down to the 0.80 level rather quickly. However, we have seen the US dollar come roaring back a bit, and that does suggest that traders were a little too bearish on the US economy overall, as the jobs number suggest that things are better than people thought at first low.
Furthermore, you need to keep in mind that a break above the 0.84 level would catch a lot of short traders on the wrong side, which of course could cause a lot of short covering in this pair. In that environment, we could see this market go racing to the 50 day EMA rather quickly. That is currently at the 0.8650 level, so I think you’ve got a situation where we could even go higher than that. In that environment, I think you would see the US dollar strengthening against most currencies, not just the Swiss franc.
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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.