The USD/CHF pair broke down during the session on Friday, finally clearing the parity level which has been so stubborn for quite some time. Recently, we pulled back and found quite a bit of support at the 0.98 level, so I essentially feel that the market has found the floor in that general vicinity. In other words, I can only buy this market as long as we stay above the 0.98 handle, which is something that looks like we’re going to do.
Above current levels, there are areas that cause a bit of resistance from time to time. Having said that though, I recognize that this move has been impulsive and strong for some time now, and I believe that there is more “fuel in the tank” so to speak. With that being the case, I don’t see any reason whatsoever to short this market and I think that pullbacks will continue to offer buying opportunities.
Swiss National Bank
The Swiss National Bank has been working behind the scenes against the Swiss franc in general, as has recently been discovered it's due to financial disclosure documents. That’s not to say that they are directly intervening in this particular market, but it cannot help but give a little bit of a supportive push in the direction of the US dollar. On top of that, a break above the parity level does carry a certain amount of psychological significance as well.
I believe that this market does continue to go higher, and higher over the longer term. I think that you cannot sell this market right now, but you do have to recognize that it will take some time to get to where we're going. I think ultimately the Swiss franc will continue to be shunned for several different reasons, not the least of which is that the European Union continues to struggle, and of course because of that we have a bit of a knock on effect in Switzerland.
