The USD/CHF pair rallied during the session on Monday, as the 0.95 level offered support. This is an area that I had recently suggested would be supportive, and now the only question for me is whether or not we can continue to go higher. After all, if we go above the highs from last week, and more importantly the 0.98 handle, I think that the market is free to go to the parity level next. At this point in time, if we pullback, we think that there is a significant amount of support below as the 0.95 level has been so reliable recently. On top of that, it was once massively resistive.
I believe that the US dollar continues to be the favored currency around the world, especially considering that the US Dollar Index continues to look so healthy. I don’t necessarily think that this pair is going to shoot straight up, but recognize that parity is an awfully tempting target.
Swiss franc continues to sell off
I believe that the Swiss franc in general will continue to sell off. As you look around the Forex markets, you can see this seems to be the case against most currencies, and with the US dollar being so strong, it’s very difficult to imagine that the US dollar is going to lose value against the Swiss franc as the ripple effect of the Swiss National Bank ending the currency peg against the Euro starts to fade into memory. Ultimately, I think that the market should continue to go much higher, and that we will ultimately wipe out the entire meltdown that we had seen previously. That means that we are going to go above the 1.02 handle given enough time, and perhaps even much higher than that. Remember, Switzerland unfortunately since most of its exports into the European Union, meaning that there is a significant knock on effect from the European Union on the Swiss economy. With that, it makes perfect sense that the US dollar continues to climb.
