The US dollar rallied quite significantly against the Swiss franc during trading on Friday as we continue to react to interest rate markets.
The interest rates in the United States jumped after the jobs number came out much hotter than anticipated.
With that being the case, I am looking at this market through the prism of one that should continue to go to the upside, and quite frankly, I think this is a situation where interest rate differential continues to favor the US dollar against the Swiss Franc and therefore I think you've got a situation where traders will continue to be somewhat bullish.
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If we pull back from here, then I would be looking at the 0.7950 region as a potential opportunity. If the market bounces from there, then I would be a buyer as well. The 0.8050 level is an area where I would expect to see a lot of resistance, but it could be a target in the short term.
All things being equal, this is a market that is fairly slow, but you get paid to hang on to this currency pair to the long side every day, and by doing so, this is a situation where you can take advantage of the interest rate differential while being patient and waiting for the market to catch up with momentum.
Ultimately, I have no interest whatsoever in shorting this pair, I don't want to pay the spread at the end of the day, but one thing that will truly help this market jump to the upside is if the US dollar gets backed up by 10-year yields that continue to climb. If they fall, that probably causes that little bit of a pullback that you could take advantage of as well.
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