Potential signal:
- I’m a buyer of this pair if we can break above the 0.92 level, with a stop loss at 0.91.
- I would be looking for a move to at least 0.95, if not parity (1.00) over the longer term.
During my daily analysis of the US dollar, everywhere I looked, I saw a lot of strength in the greenback. The USD/CHF pair was the first place I looked at as the tariffs out of the United States being announced had everybody running to the greenback. I was interested to see whether or not they would use the Swiss franc as a “safety currency”, but later in the day Donald Trump suggested that the European Union might very well based tariffs as well, and while this doesn’t directly affect Switzerland at first glance, the reality is that the Swiss send 85% of their exports into the European Union.
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Technical Analysis
The technical analysis for this pair is obviously very bullish, but the 0.92 level will continue to be a bit of a ceiling. If we can break above that, then I think you have the next leg higher, and we probably see the US dollar really take off against the Swiss franc. Underneath, we have the 0.91 level offering a certain amount of support, and then after that we have the 0.90 level. The 0.90 level is also backed up by the 50 Day EMA, so I think that is worth paying close attention to as well, as this pair is typically very technically driven.
The interest rate differential does favor the greenback, and I think that is one of the things that you will have to continue to pay close attention to as you get paid at the end of every day to hold this pair. However, you also have to keep in mind that Switzerland has recently seen the Swiss National Bank cut interest rates by 50 basis points in a desperate move to shore off some of the negativity surrounding them. This Swiss economy will continue to suffer at the hands of a very weak Europe, and I think therefore you continue to see the US dollar rally against the franc.
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