Keep in mind that inflation in the European Union is still running hot, and that of course has a major influence on Switzerland itself. 85% of Swiss trade goes back and forth between the EU and Switzerland, so it is thought that perhaps the inflation fight will continue at the SNB.
- The USD/CHF has fallen rather hard during the trading session on Wednesday, as the Swiss franc has taken full advantage of it.
- There is a significant amount of support just below, so it’ll be interesting to see how this plays out.
- The 0.94 level begins a rather important support level that it could extend down to the 0.93 level.
A lot of this will come down to interest rate expectations coming out of the Federal Reserve, as people are now starting to bet that the Federal Reserve may have to slow down its rate hiking cycle. At the same time, the Swiss must deal with relatively high inflation, but with the FOMC Meeting Minutes coming out late on Wednesday, it’s possible we may get a very quick reversal. After all, if you get the US dollar correct, you get most markets correct. The area just below one is where we had seen a significant amount of resistance previously, so would make quite a bit of sense that “market memory” were to come back in and lift this market.
Time to Start Buying
On the upside, if we can take out the 0.96 level, then it’s an obvious break out that a lot of people will probably follow. In that scenario, I would fully anticipate that the market breaks above the 200-Day EMA, and then eventually makes its way to the 50-Day EMA. Having said that, the 50-Day EMA will probably be but a small bump along the road to the 0.98 level, followed by parity.
Keep in mind that inflation in the European Union is still running hot, and that of course has a major influence on Switzerland itself. 85% of Swiss trade goes back and forth between the EU and Switzerland, so it is thought that perhaps the inflation fight will continue at the SNB. Regardless, if we were to get some type of supportive-looking bounce or candlestick, I feel like it might be time to start buying again, simply based on technical analysis. After all, the upside outweighs the downside, and that of course is the very essence of trading. If we do break down significantly, we could see a massive amount of support coming into the picture at the 0.92 level, which had been steadfast in its support for several months last year.