The US dollar rallied a bit against the Franc on Thursday, as we continue to see the interest rate differential play out in this market. This is a market that has been paying you for simply sitting on the long position.
USD/CHF
The US dollar rallied a bit against the Swiss franc during the trading session on Thursday as we continue to see plenty of upward momentum in this market. The US dollar has been grinding higher for some time, and it now looks as if the breakout could be commencing. With this, the market is likely to continue to look at the 0.82 level as important. Short-term pullbacks could see plenty of support all the way down to the 50-day EMA, which is an area that technical traders will be watching very closely.
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The 0.81 level is a bit of a magnet for price, and it is, at least until the last 24 hours, seemed to have been the mid price of the overall consolidation range.
Central Bank Policy Divergence Drives Dollar Strength
The Swiss National Bank is doing everything it can to keep its monetary policy loose and its currency as weak as possible. Ultimately, the thing is that the situation is going to continue to see a lot of value hunting as the US dollar is propelled higher by much stronger rates, while the Swiss National Bank is likely to continue to keep rates extraordinarily low. This will remain the attitude of the Swiss from everything they are telling the markets at this point.
If the market were to break down below the 50-day EMA, then it would change a lot of things, but right now, it doesn't look like it's ready to do so. In general, the US dollar remains strong, and with inflation concerns driving Federal Reserve rate hiking possibilities higher, it makes sense that we continue to see the dollar favored over the franc.
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