The CAD/CHF pair fell during the session on Monday, as we pulled back from the 0.86 level. This area has been resistive lately, and as a result it’s not a surprise to see that we pull back a little bit. However, at the end of the day we are in an uptrend, and we have broken to a fresh, new high recently. With that, I believe that this pair will continue to go higher, as although the Canadian dollar is a necessarily the strongest currency right now, it certainly is doing better than European-based currencies such as the Swiss franc.
There is a little bit of a “risk on” aspect to this currency pair going higher as well, as certainly there is more in the way of interest-rate payments coming out of Canada than Switzerland. With that being said, we could drop as low as 0.84 as it is the bottom of the recent consolidation area. With that, I feel that a pullback to the 0.84 level could see buyers step into this marketplace. There is more than enough support in that region as far as I can tell to think that the market will do fairly well.
Switzerland sends 85% of its exports into the European Union.
The biggest problem for Switzerland is Europe. The Swiss have a serious problem in the fact that the Europeans, their biggest customers, simply are struggling economically. That being the case, I feel that the Swiss franc will continue to sell off and simply by proxy. Don’t get me wrong, I’m not a huge fan of the Canadian dollar, but I do recognize an opportunity in this pair. A move above the recent high should send this market looking for its next leg up.
With that being said, I believe that if we get above the 0.86 level, we should head to the 0.90 level after that. I think pullbacks going forward will continue to be buying opportunities over the next several weeks. I have no interest whatsoever in selling this pair until we get well below the 0.83 handle, something that isn’t going to happen anytime soon.