The US dollar has been slightly negative against the Swiss franc again on Friday, as there are a lot of concerns out there with the Middle East headlines, and interest rates.
USD/CHF
The US dollar has been slightly negative against the Swiss franc again on Friday, continuing the very ugly behavior that we had seen from the previous session on Thursday. That being said, the 0.78 level is an area that I think we will continue to see a lot of action and potential support. I do like the idea of perhaps waiting for a little bit of a bounce that I can take advantage of in a market that, quite frankly, is more likely than not going to eventually revert back to interest rate decisions and interest rate differentials.
Because of this, I think you have to look at this through the prism of a market that sooner or later does take off. I do believe that you have to be a little bit patient, and I think you also need to pay close attention to whether or not we break down below the 0.7760 level. The reason I say this is that we could see a bit of deeper correction, but that is okay. That is perfectly fine, and with that being said, I would look at this through the prism of a market that will eventually have to determine which direction to go in a longer term.
Central Bank Intervention and Long-Term Outlook
I do think that it is very difficult to try to buy the Swiss franc in an environment where the Swiss National Bank is so clearly willing to get involved and intervene if the Swiss franc continues to appreciate.
This has been a short-term move that a lot of traders will continue to look at as a potential buying opportunity, but if we were to have a situation where the market continues to see downward pressure, then you have to be very cautious, probably waiting for things to stabilize. This is more likely than not going to be true for all Swiss franc related pairs.