Potential signal
If we hit 0.8033, I am buying, with a stop loss at the 0.7950 level.
I would hold until 0.82 above.
The US dollar has been noisy on Thursday against the Swiss franc as we find ourselves testing a major psychologically important figure in the form of 0.80. This obviously is an area that would attract a certain amount of attention not only by technical traders but options markets. It's also worth noting that the 0.80 level has been important as far as resistance is concerned.
While that is obvious resistance, we also have significant support near the 0.7944 level, where the 200-day EMA is hanging around. In other words, we have been in a very tight range over the last couple of days, and I think we are just simply waiting to see what happens next. A lot of this will come down to interest rate differential, and it's possible that the 10-year yield might be our next clue.
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Watch the 10 Year Yield in America
The 10-year yield in the United States has been somewhat sideways over the last couple of days, so that also has put a little bit of a cap on the idea of an explosive break through this resistance. That being said, I do expect it to eventually happen, but a short-term pullback could be in the cards. If we get that pullback, I'm more than willing to start buying, especially if we get a pullback towards the 0.79 level.
I have no interest in shorting this pair because, quite frankly, I do not want to pay the interest rate swap at the end of each day. Given enough time, I think the upward pressure continues and we eventually break out and go looking to the 0.8250 level, which might take some time to get to, but you get paid to hang on to this pair if you are a buyer at the end of each session and that will help pad your account.
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