- I find that I think the GBP/CHF currency pair is ready to bounce.
- It's the British pound against the Swiss franc, and we have recently bounced from the 200 day EMA, suggesting that longer term uptrend viability remains.
- The 1.13 level was also there right around the 200 day EMA, as well as the 38.2% Fibonacci retracement level.
Because of this, I think you've got a situation where traders will continue to look at this through the prism of getting paid at the end of every session. After all, the interest rate differential will most certainly favors Great Britain over Switzerland. As for the Swiss National Bank has cut rates already. Furthermore, inflation has been a little bit sticky in the UK, so I think that comes into the overall psyche of the market.
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Quite frankly, as we see people start to realize less interest rate payments from bonds, they start to look for proxies. And that might be part of what we are seeing here as well. With a little bit of imagination, you could suggest that we are in the midst of forming a massive symmetrical triangle, but we are squeezing higher over the longer term. This is a market that can be extremely volatile, and as a result, it wouldn’t be overly surprising to see a massive move higher, but when it happens is an open question altogether.
I think we are more likely than not to go looking to the 50 day EMA above, which is a major technical indicator sitting right around the 1.14 to 5 level. This is a pair that is typically very volatile, and it does have a real sensitivity to the risk appetite of traders around the world, so keep an eye on that as well. If we were to break down below the 1.12 level, then I think this pair probably sees a deep correction.
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