- During my daily analysis of the USD/CHF pair, I cannot help but recognize that there is a significant amount of momentum in this pair, as it looks like money is flowing into the United States yet again after the massive victory by Donald Trump, and of course the Republicans.
- With this being the case, the market looks as if it is now threatening a major breakout, and therefore it’s likely that we would continue to see a lot of volatility at this point.
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Technical Analysis
The technical analysis for this market is of course rapidly evolving, but at this point in time, the size of the candlestick is something that you should be paying close attention to, because quite frankly this is a pair that it is quite often very subdued. By breaking above the 200 Day EMA, it does suggest that the trend is in the midst of changing, and now that we are above the 0.8450 level, it suggests that the market is really starting to pick up momentum.
Keep in mind that the US dollar is featuring higher interest than the Swiss franc, and despite the fact that the Federal Reserve is likely to cut rates during the Thursday session, the reality is that you still get paid at the end of every day to hang on to the USD/CHF exchange pair, I think at this point you have to wonder whether or not this isn’t a complete repudiation of the overall downtrend.
At this point, the 50 Day EMA is an area that I would be paying close attention to, which is just above the 0.86 level. The 0.86 level has been very important for the last several months, so I do think there’s a certain amount of “market memory” in that general vicinity. At this point, it would not surprise me at all to see the US dollar go looking to the 0.8850 CHF level next.
Keep in mind that the Federal Reserve interest rate decision on Thursday will cause a lot of volatility, but I think unless they explicitly say more rate cuts are coming, the reality is that any pullback at this point in time will more likely than not end up being a buying opportunity.
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