The US dollar has been very noisy early on Monday but continues to offer better interest rates than the Swiss franc, giving a “carry trade” setup at the moment. I have been long for a while now and look at dips as opportunities.
USD/CHF
The US dollar has been very noisy during the trading session on Monday as the market continues to see overall interest in the US dollar against the Swiss franc, the interest rate differential of course being favorable, and I like to buy dips here in general.
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All things being equal, this is a market that has bounced off the 50-day EMA in the last couple of weeks a couple of times, and this market looks as if it is trying to reach the 0.8150 level. The market has the positive swap that a lot of people take advantage of, myself included, and I don't worry so much about a huge move to the upside. This is a market that's more or less an investment. This is a market where patience is an important thing to have, as it moves slowly.
Interest Rate Differentials and Technical Outlook
While the US dollar has a 55% chance of seeing an interest rate hike in September, the Japanese are so far behind, it's very difficult to imagine that the market falls apart without some type of external pressure. The interest rate differential is certainly not going to be that reason to start falling anytime soon.
So, I like buying dips here. I continue to hold a core position. I do think eventually we could go higher. The 0.82 level has recently offered a bit of a barrier. We'll see if we can get above that. Breaking down below the 50-day EMA could open up an attack on the 200-day EMA or the 0.80 level, essentially the same thing at this point.
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