The euro remains positive against the Swiss franc, as we see the carry trade still playing out.
EUR/CHF
The euro has been choppy against the Swiss franc during trading on Thursday, but it remained elevated. It remains bullish, and it remains a positive interest rate differential. After all, the Swiss National Bank maintains its zero interest rate policy, and it doesn't look like it's going to be changing from that anytime soon.
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With that being the case, I like the idea of buying pullbacks. I believe that the 0.94 level remains a floor in the market. As long as we can stay above there, then I think that is a very bullish sign. Even if we break down below there, the 50-day EMA could come into the picture to support as well.
The 0.95 level above is a psychologically important barrier
The 0.95 level above is a psychologically important barrier, but there's nothing particularly special about it. I do think that we go higher, and in fact, some of the larger banks out there are now calling for 0.96 by the end of the year.
Keep in mind, this is a pair that moves pretty slowly, so the fact that you get paid at the end of every day does help build an attractive position. We are very bullish at this point. We are a little overbought according to the stochastics, but that should open up the possibility of finding value.
I have no interest whatsoever in buying the Swiss franc, and despite the fact that there are plenty of reasons for the safety trade to come back, it's obvious to me that around the world we're paying attention to rates, not so much safety.
The two aren't necessarily going to operate the same way in any environment, and in this environment, it continues to be a major problem.
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