The USD/CHF pair initially fell during the course of the session on Friday, but found enough support below to turn the market back around. After all, the 0.96 level is a large, round, psychologically significant number, and of course would attract traders in general. Because of this, I am looking for a break above the top of the hammer in order to start buying again, but quite frankly I think pullbacks could be nice buying opportunities as well. I believe that the 0.95 level will be a bit of a “floor” in this marketplace, as it is a large, round, psychologically significant number and the scene of massive resistance in the past. Because of this, I am essentially “buy only” at this moment in time.
Swiss National Bank
You have to keep in mind that the Swiss National Bank has been working against the value of the Swiss franc as well, so it makes sense that we should continue to go higher. Granted, they typically are more interested in the EUR/CHF pair, but it does have a bit of a “knock on effect” in this pair in general. With this, I believe that it’s only a matter of time before we continue to break higher and eventually hit the parity level. There are a couple areas that are going to cause a bit of resistance between here and there, namely the 0.98 and the 0.99 levels, but ultimately I think that the strength will overcome.
Any pullback at this point in time has to be looked at as a potential buying opportunity as it represents “value” in the US dollar. I think that the Swiss franc will continue to soften in general, especially considering that the Swiss National Bank tends to be one of the more aggressive central banks when it comes to easing policies. Real negative interest rates will continue to drive down demand for the Swiss franc overall and therefore I remain very bullish.
