The US dollar continues to see bullish behavior against the Swiss franc, and carry trading is still popular for forex traders. Ultimately, this is bullish for the foreseeable future from what I see.
USD/CHF
The U.S. dollar has rallied again against the Swiss franc as the interest rate differential continues to be a major driver of where we go.
Ultimately, this is a market that I think will remain positive over the longer term, mainly due to the interest rate differential being so wide. Remember, the Swiss are basically zero-bound, while the Americans are in a situation where they may have to raise rates.
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Later in the day on Thursday, we did get word that potentially the Americans and the Iranians are working on a deal to reopen the Strait of Hormuz, and that does change some things. But I think short-term pullbacks probably still get a little bit of attention. The interest rate differential is so wide, it certainly is not going to go in favor of Switzerland, but that could provide the little bit of a pullback that a lot of people want to see.
The 0.82 level is an area of potential support
It was resistance, and it has shown itself to be support recently. After that, you have the 50-day EMA sitting just above that crucial 0.81 level.
So, I think all in all, this ends up being a pretty positive-looking chart in general. I do not have any interest whatsoever in getting too cute here. I think you have to believe that potentially traders will continue to look for a reason to take advantage of the swap, and short-term pullbacks will more likely than not simply offer an opportunity to get cheaper U.S. dollars.
Again, I have no interest in shorting this pair.
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