The US dollar continues to see buyers overall, but the Swiss franc has seen this area that we tested as a major barrier previously.
USD/CHF
The U.S. dollar rallied against the Swiss franc early in the trading session on Monday as the 10-year yield jumped above the 5% level at one point, although yields have dropped quite a bit since then. That being said, it coincides quite nicely with the U.S. dollar testing the 0.82 level, an area that had been significant resistance against the Swiss franc previously.
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The Swiss franc seems to be fighting back, though, as it looks like we are trying to form some type of exhaustion candle. A pullback from here opens up the possibility of a continuation of the overall consolidation that we have been in since the middle of June, which in and of itself would not be a huge surprise due to the fact that the carry trade continues to pay traders to hang on to this pair to the upside.
But they also have to keep in mind that the market does tend to be fairly quiet when it comes to trading the U.S. dollar against the Swiss franc.
Both are considered to be safety currencies, but the interest rate differential certainly favors the United States. The 50-day EMA sits right around the 0.8075 level and is rising. It could open up the possibility of some type of buying opportunity.
Underneath there, we have the 0.80 level, a large, round, psychologically significant figure that has not only been attracting the 200-day EMA, but is also an area that previously has reacted as support and resistance. The stochastic oscillator has crossed into overbought condition during the session on Monday, so it does make a certain amount of sense that maybe a little bit of a pullback shows up.
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