By: Christopher Lewis
The USD/CHF pair has recently been affected by the goings on in the EUR/CHF pair. The Swiss National Bank has a standing “minimum acceptable rate” of 1.20 for the EUR/CHF pair, and as a result, most CHF-related pairs are being manipulated by proxy. This is because the market for the Swiss franc is one of the most illiquid of the majors.
If the SNB intervenes in the EUR/CHF pair, all XXX/CHF pairs will rise as a result. This has been seen in the past, and there is no reason to think that suddenly this reaction won’t be likely. The USD/CHF pair isn’t directly being manipulated, but you better believe that your account won’t care if you get caught on the wrong foot in this market after an intervention.
Many levels
The USD/CHF pair currently sits above the 0.90 level, and this was one that I have as an important “zone” because of the large round number effect that you often see in the markets. Also, it should be noted that the area is the 61.8% Fibonacci retracement level from the rally a few months ago. In other words, the level simply had to hold to keep any type of bullish attitude.
As we have seen, it did. Now we have a doji of sorts for the Thursday session, and that is just under the 0.91 resistance level. With this in mind, I believe that a pullback is very likely. The large candle for the Wednesday session looks very bullish to me, and I think the fact that the SNB is working against the Franc could be another catalyst for bullishness in this pair.
.png "USD/CHF Daily 3/2/12")
Because of the overhead resistance, I am looking for pullbacks in this pair to buy. The EUR/CHF pair is currently hovering just above the 1.20 handle and because of this – it is going to be difficult to think that the Franc can appreciate much more. The safety trade from time to time should continue to push the demand for the Dollar going forward. The 0.91 level will have to be overcome on a daily close in order to push forward, but looking at the longer term charts, I believe the 0.95 level will be seen relatively soon.