The US dollar rose in value against the Swiss franc on Monday, as we continue to see the interest rates in America drive where we are going.
USD/CHF
The US dollar has rallied slightly against the Swiss franc on Monday as we continue to see a lot of noisy behavior. The 0.78 level is an area that continues to offer a lot of interest. This is an area that has been important from both a support and resistance barrier multiple times in the past and of course it's also worth noting that the 50-day EMA sits above and offers resistance.
If we can break above the 50-day EMA, then it opens up the possibility of a bigger move higher. Quite frankly the interest rate differential is so wide that it makes quite a bit of sense that we would continue to see a lot of reasons for this pair to go higher.
Central Bank Policy and Market Sentiment
Furthermore you also have to keep in mind that the Swiss National Bank is likely to continue to be very guarded as to whether or not they allow the Swiss franc to appreciate too much and in this environment I think we have a situation where even if this market does start to fall apart then you have to ask questions about whether or not the Swiss will get involved and intervene.
While the US dollar isn't the premier currency that they worry about against their Swiss franc the knock-on effect would certainly be felt. The Euro is their biggest concern but as a general rule the Euro and the US dollar move in the same direction against the franc.
All things being equal this is a market that I do believe tries to work its way back to the 0.80 level but it's going to take a certain amount of time to get there. Remember you get paid to hang on to this pair as it is such a good swap that it gives you a little bit of a cushion along the way.