USD/CHF Pulls Back, Building Gains

By: Christopher Lewis

The USD/CHF pair has been quietly gaining as the rest of the world watches the EUR/USD pair. The drama coming out of Europe continues to grab all of the headlines, and as a result most of the attention. The trading community has been fighting each other tooth and nail in this pair, while the USD/CHF has been quite reliable in its grind higher.

The pair initially surged as the Swiss National Bank announced that it was “no longer going to tolerate the EUR/CHF pair below 1.20”, sending the Franc into a tailspin that saw 1,000 pip gains against it within 15 minutes. The USD/CHF has since pulled back to the 50% retracement line, and has now attempted to break those previous highs. If these highs can be overtaken, it would signal another leg up for the pair, with the first obvious stop being 0.95, and then onto the parity level.

As the safe haven status of the Franc has been obliterated, the obvious choice has been the US dollar. So while the EU and its problems have come to the forefront, traders run to the US. At the same time, nobody wants to hold the Franc for too long, making this the most obvious, yet subtle trade out there presently. Buying the USD/CHF has made you nice consistent gains over the last few weeks if you have been paying attention. If the pair can hold gains above the 0.93 level, we should see a continuation of this trend. In fact, it would be the first higher high in a long time, and suggests a possible trend change on longer time frames as well.