- The USD/CHF has rallied again during trading on Thursday as we continue to consolidate just below the 0.99 level.
- This is an area that extends all the way to parity in this market that could cause some issues.
- If we can break above parity, I suspect that the US dollar will take off to the upside, and when you look at the way this market has behaved during most of this year, it appears that we are in fact trying to build enough pressure to make that happen.
On a break above parity, I suspect that the dollar will eventually trade at Fr.1.05, based upon the measured move of the overall consolidation. We look at the longer-term charts, the Fr.1.05 level has been important multiple times, so it would not surprise me at all to see it pop up again. The 50-Day EMA underneath has offered a certain amount of support near the 0.97 level and is rising at this point. Ultimately, I think this is a market that will eventually find plenty of noisy behavior, but if we can finally break above that parity level, the momentum jumping into this market could really get things going.
Market Likely to Go Higher
In the short term, the market could pull back to the 0.98 level, which is an area where we can see a line of support, and therefore I think it would be a value proposition. Keep in mind that the Non-Farm Payroll announcement comes out on Friday, so that will cause a significant amount of volatility, but I believe now you are still trying to find value in the greenback, as it is fundamentally strong, and will continue to run through European currencies like a wrecking ball.
This includes the Swiss franc, although the Swiss economy is quite often thought of as a safety play. Ultimately, the Swiss will have a lot of the same issues that the Europeans going to have, mainly a lack of energy. If that’s going to continue to be the case, then the Swiss franc will suffer against the US dollar. I like buying tips, I don’t have an interest in shorting the US dollar against anything, including the Swiss franc. In fact, the market has been clear in its determination to go higher.
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