The interest rates in the United States will continue to be a massive driver of where we are going next.
USD/CHF
The US dollar has shown itself to be a little bit negative during the trading session on Friday, but I think this is going to be very interesting to watch because the markets will continue to see this react to interest rates. The interest rates in America climbing will certainly help this market against the Swiss franc as the interest rate differential is so wide. It does make a certain amount of sense that we would see that be the carry trade playing out.
But over the weekend, we have a meeting in Islamabad, Pakistan between the Americans and the Iranians that will determine where we go next. In this environment, I think you have to be very cautious, but it does look like the US dollar is trying to turn things around and rally. The 0.79 level is an area where we have seen a lot of action previously, both support and resistance.
Technical Indicators and Support Zones
Now we have the 50-day EMA here, so I am interested in buying this market if we can break above the top of the last couple of days. At that point, then we probably go looking to the 200-day EMA, possibly the 0.80 level above. That is a large, round, psychologically significant figure that could be a bit of a barrier.
If we can break above the 0.8050 level, then it is likely that the market will go much higher. If we break down from here, perhaps there is a huge run on the dollar, maybe in risk-on type of behavior, then I will be looking to buy this pair at a lower level because the Swiss National Bank will get involved if it drops far enough. I'd be looking at the 0.78 level as a potential area for a bounce and a buy.