- The Australian dollar against the Swiss franc is a pair that a lot of people don’t pay attention to, but it is worth noting that we are at a major resistance barrier as I write this article.
- The area between the 0.59 CHF level and the 0.5950 CHF level has been a significant barrier multiple times in the past.
- However, things are changing and of course you do get paid to hold this pair as the Swiss National Bank is the first major central bank in the world to cut rates.
Underneath, it’s also worth noting that the 200-Day EMA looks likely to hold as support, while the 50-Day EMA is racing toward it. With this being the case, we could eventually get the so-called “golden cross”, which of course is an indicator that longer-term traders tend to pay close attention to. With that being the case, I think you need to see this through the prism of trying to kick off a brand-new trend to the upside.
The Swiss franc is a funding currency
The Swiss franc is funding currency at this point, as interest rates in Switzerland only offers 1.5%, and it looks like the Swiss National Bank may start to cut rates going forward. If that’s going to be the case, eventually the Swiss franc has to pay the price. Furthermore, the Australian dollar is influenced somewhat by the gold market, which of course is extraordinarily bullish at the moment. With that being said, it is worth watching this through the prism of whether or not the Swiss franc will continue to be part of the “carry trade”, which I think it will be.
Pay close attention to this market, because it seems like it’s relentlessly pushing to the upside and if we can break above the 0.5950 level, then it’s very possible that this market explodes to the upside, and we eventually take off toward the 0.60 level above. If we do pull back and break down below the 200-Day EMA, then it will just show that this market is staying in the same massive consolidation area that it had been in previously that extends down to the 0.56 level.
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