- The USD/CHF initially tried to rally on Monday but gave back gains as we approach the 50-Day EMA.
- That of course is an area that a lot of people would be paying close attention to, and the fact that we turned around for a bit of it inverted hammer suggests that we are ready to go lower.
- With this, I am a bit cautious, but I also recognize that the Swiss franc of course makes quite a bit of sense considering that it is a “safety currency”, despite the fact that the US dollar is as well.
This will almost certainly be reflective of the interest rate differential between the 2 economies, and of course what’s going on in the 10-year yield in the United States. It fell during the trading session after initially surging on Monday, which explains the price action that we have seen. It’s worth noting that we are getting close to the bottom of the overall large consolidation area, with a 0.8650 level underneath will be significant support.
We’ll Eventually Find Value Hunters
On the other hand, if we turn around a break above the 200-Day EMA, presently near the 0.9050 level, then the market could turn around and go racing toward the highs again. All things being equal, this is a market that I think eventually goes looking to the 0.93 level, the 0.95 level, and so on. I do think that the Swiss bank will eventually lose it since of humor, but right now is nowhere near intervening as it has been raising interest rates at the same time.
The Federal Reserve remains very tight with its monetary policy and with GDP numbers coming out this week, it does make a certain amount of sense that the market might be a rather volatile turn of events waiting to happen. All things being equal, this is a situation where we will eventually find value hunters. The 0.88 level underneath his massive support as well, so that might be an area where you start to find value hunters. Regardless, I don’t necessarily want to short this market quite yet, I recognize that there are a lot of buyers underneath.
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