The US dollar fell against the Swiss franc on Tuesday as there is a lot of geopolitical noise out there, having traders running to safety where they can find it.
Also, there are plenty of other geopolitical issues to worry about, and this makes a certain amount of sense that the Swiss franc will have been bought into. That being said, I think this is a temporary blip, and we are already starting to see the US dollar push back a bit against other markets.
So, this analysis for me doesn't change. The dollar continues to pay more in interest than the Swiss franc, and I think over the longer term, what we are in the midst of is a bit of a basing pattern. The Swiss National Bank, of course, will be watching Swiss franc strength and has explicitly stated that it is in fact doing that.
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So, I plan on adding a little bit more to my position and continuing to use this essentially like a dividend stock that pays its dividend every day. Over the last several months, I've been repeating this action, buying dips, selling the market once it gets close to 0.81, and so far it's played out quite nicely.
The interest rate differential has paid me enough to make this a very profitable position over the last 6 months, and it is something I plan on continuing to do. If we were to break down from here, a move below the 0.78 level probably sends the Swiss National Bank back into action to weaken the strength of the Swiss franc.
If we can turn around and break above the 200-day EMA, then we could go higher, but ultimately, I think this is a situation where a short-term bounce is probably what I'll be looking for.
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