The US dollar initially dropped against the Swiss franc to kick off the week, but we have since seen the US dollar rally a bit.
USD/CHF
The US dollar initially dropped against the Swiss franc on Monday but then turned around as interest rates continue to climb. All things being equal, it is worth noting that the market is hanging around the crucial 0.81 level, an area that a lot of people will be watching very closely as it has been a bit of a fair value area. All things being equal, this is a market that I think continues to try to build up pressure here. After all, we have been rallying for some time, and the recent 50-day EMA breaking above the 200-day EMA kicks off the so-called golden cross.
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Technical Crosscurrents and Safe-Haven Dynamics
The market will continue to be noisy in general, as will be the case with most currency pairs, especially when you are talking about the US dollar with all of the concerns around the world and the Middle East. It does make a certain amount of sense that this pair particularly is noisy, as the Swiss franc is considered to be a safe haven currency, but at the same time so is the US dollar. Interest rates in the United States, of course, continue to attract inflows. If we continue to see the interest rates play out the way they have, when you marry this up with the Swiss National Bank essentially having zero rates, then it does make a lot of sense that this pair continues to see upward pressure.
That does not mean that it is going to be easy, nor does it mean that the market is going to take off and go straight up in the air. What it does mean, though, is that longer term I will continue to look at this as a potential buy-on-the-dip market. You get paid at the end of every day, and that, of course, is something worth paying attention to. It does matter over the longer term, and it can help you ride through a lot of volatility as it comes.
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