The USD/CHF pair rose during the course of the day on Wednesday, testing the 0.95 handle. This is an area that has been both supportive and resistance in the past, so it makes complete sense that there should be some type of reaction as we approach this level. I firmly believe that if we can get above this area that denotes real strength in this pair. Remember, this pair tends to be the exact inverse of the EUR/USD pair, and that pair of course fell apart during the session on Wednesday. In fact, the volatility is almost nauseating when you’re dealing with the Euro in general. This is why I actually prefer to play this particular currency pair, because it does tend to be a little bit more stable overall.
Now that we are testing the 0.95 level, I feel that if we can break above the 0.9550 level, we are probably going to see a return to the 0.98 level first, then possibly as high as parity given enough time. There does seem to be a significant amount of support just below, and extending all the way down to the 0.90 handle as far as I can tell. With this, this is essentially a “buy only” type of situation.
Swiss National Bank
The Swiss National Bank has been working against the value of the Swiss franc in general, and as a result it makes sense that we would see this pair go higher over the longer term. After all, even though they are not directly intervening in this particular currency pair, movement in the EUR/CHF pair does have a bit of a knock on effect over here. The US dollar is favored over most European currencies on the longer-term charts anyways, so this isn’t much of a surprise. The question then becomes whether or not we can get some type of clean break. I think we will get a break higher, and I think you can add on short-term dips, but regardless what happens next I think the one thing you can count on will be volatility. That’s probably true in all currency pairs.
