The US dollar has been slightly positive again against the Swiss franc on Thursday. With this, the carry trade seems to still be in play.
USD/CHF
The US dollar has spent the majority of the Thursday session rallying against the Swiss franc as we continue to see the consolidation range play out. Quite frankly, this is a market that has recently seen the 50-day EMA hold as support and seems to be attracted to the 0.81 level. The 0.81 level is an area that a lot of traders will be watching closely as it's been like a magnet for price.
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Over the longer run, it's very likely that we continue to see volatility. It makes sense considering just how noisy things are in the world. Remember, the Swiss franc is considered to be a safety asset right along with the US dollar, but the interest rate differential continues to make the US dollar a bit more attractive from a carry trade standpoint.
Carry Trade Dynamics and Key Technical Levels
If this keeps up, you could have a situation where traders eventually push this market to the upside and break above the crucial 0.82 level following the uptrend that we have been in since roughly the end of January. With that being the case, it's a scenario, at least at this point, that looks very much like a buy-on-the-dip type of market.
Whether or not that remains is something that we'll just have to wait and see, but as things stand right now, it certainly looks as if we are trying to reassert the upside. In this environment, that does make a little bit of sense because you do get paid to hang on to the position to the upside, and as a result, traders continue to hold and are more likely to build this into a longer-term swing trade potentially.
If we were to turn around and break down below the 200-day EMA, though, that could change the technical analysis, but right now we are on the verge of trying to break out to the upside.
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