The US dollar continues to be strong against the Franc, despite the pullback on Thursday.
USD/CHF
The U.S. dollar has pulled back against the Swiss franc despite the fact that the Federal Reserve sounded very hawkish in the previous session and raised rates again. It looks like the market is giving back some of those gains.
That being said, this is a breakout-and-pullback setup from what I can see, especially when you look at the stochastic oscillator, which currently looks very much like a market that is overbought and has seen a bit of weakness due to that overstretched condition.
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The 50-day EMA and the 200-day EMA are spread out and going higher
When I look at this currency pair, it's easy to see that it is attractive. The 50-day EMA and the 200-day EMA are spread out and going higher. Of course, the interest rate differential continues to favor the Americans as well.
Ultimately, I do like buying this dip, and I do think that the U.S. dollar goes higher over the longer term. In fact, I have been long in this market for quite some time and look at moves like this as a pullback that could perhaps be taken advantage of.
The 0.83 level is the next large, round, psychologically significant figure that a lot of people will be watching. If we can break above there, then the market could go looking to the 0.85 level.
The markets will continue to pay close attention to the Federal Reserve and perhaps even pay attention to the Swiss National Bank, as it is hanging on to a zero-interest-rate policy, and it doesn't look like it is going to change that anytime soon.
Ultimately, I do like the idea of buying each dip and adding to a longer-term position, just as I have for quite some time. I see this pullback as just a simple reaction to being stretched, and I also look at this as an opportunity to continue to build what I think could be a multi-year position.
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