The U.S. dollar has rallied significantly against the Swiss franc as interest rates spiked in America due to energy concerns and the obvious attitude of both the United States and Iran as far as being able to make a deal. It seems very unlikely, and therefore people are starting to focus on the idea of energy inflation around the world. That is making rates rise everywhere.
Top Regulated Brokers
The interest-rate differential strongly favors the U.S. dollar, with the Federal Reserve's target range at 3.75%–4.00% compared with the SNB's 0% policy rate.
The 0.83 level is the next target I'm watching
We have seen it take off from the 0.82 level, an area that previously had been resistance. With market memory being found in that area, it does make sense that buyers may have jumped back in, especially when compared to the interest-rate markets.
The 0.83 level is the next target I am watching, but even after that, I think you probably have more momentum to the upside, maybe as high as 0.86. If we were to turn around and break down below the 0.8150 level, it would be a negative turn of events, but I do not necessarily think that is going to be the case. The 50-day EMA is sitting just below there, so even that move might be a little bit muted.
All things being equal, this is a pair that I have been long of for quite some time, as you get paid at the end of every day. Over the last several months, just the swap alone has made quite a bit of difference. Until the fundamental backdrop, especially in the Middle East, changes, it is difficult to imagine this market turning around for any significant amount of time.
While I do understand that the Swiss franc is considered to be a safe-haven asset, so is the U.S. dollar. It is worth noting that the Swiss National Bank has no interest whatsoever in getting away from the 0% interest rate.
Ready to trade our daily forex forecast? Here are the best online trading platforms in Switzerland to choose from.