The US dollar has pulled back in the early hours of the session on Wednesday, but with the Federal Reserve interest rate decision coming out, volatility is possible.
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USD/CHF
The US dollar has pulled back initially during the trading session on Wednesday but found buyers against the Swiss Franc to show resiliency yet again. That being said, the session on Wednesday features the Federal Reserve, and the Federal Reserve interest rate decision, of course, will be parsed very closely right along with the statement and the press conference.
As things stand right now, the interest rate differential between the United States and Switzerland is wide enough to drive a truck through, and therefore it shows a certain amount of strength in this market, as we have seen played out over the last several months.
Interest Rate Differential Continues to Favor Buyers
The 50-day EMA crossed above the 200-day EMA back in early July, and now we are starting to see a lot of overall upward momentum. The 0.81 level was an area that previously had been a bit of a magnet for price, and the 50-day EMA now finds itself at the 0.8050 level. Both of those could end up as support levels if we do in fact pull back, but all things being equal, the interest rate differential should continue to favor buyers.
I have been a buyer of this pair multiple times over the last several months and continue to add to a core position every time I get a bit of cheap US dollars available.
Ultimately, this is a market that I think will remain bullish despite the fact that there are a lot of concerns out there, and it could drive a little bit of interest in the Swiss Franc. The interest rate differential alone, though, means that buying the Swiss Franc against other currencies would be a better safety trade anyway. This is a market that I think has much further to go, and I remain extraordinarily bullish.