Potential signal:
- I’m a buyer of this pair only.
- If we can break above the 0.92 level, I will start buying USD/CHF again, with a stop loss at the 0.9080 level.
- The target could be as high as 1.00 over the longer term.
During my daily analysis of major currency pairs around the world, the USD/CHF still is very front and center of what I am watching. Quite frankly, the Swiss franc I think is in a lot of trouble, with the Swiss National Bank cutting rates by a whopping 50 basis points the last time they had an interest rate decision. This suggests that perhaps there is a little bit of fear in Switzerland, and quite frankly there should be, due to the fact that 85% of Swiss exports end up in the European Union. In a sense, this has something to say about the European Union as well, so will keep in mind that the entire region seems to be somewhat toxic.
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Contrast that with North America
Looking at this chart is a complete visual aid as to what’s going on in North America versus the continent of Europe. While Canada is an absolute mess economically and politically, the reality is that the United States is big enough to drag North America right along with it. Furthermore, it’s worth noting that there are a lot of concerns around the world about interest rates, because quite frankly interest rates are being cut by several banks around the world, but in the United States, it seems bond traders don’t seem to care about this, and they are simply driving yields higher. I think that probably ends up being a story here, as interest rates in the United States continue to climb.
That being said, you get paid at the end of every day to own this pair, I think that will continue to be the case going forward. Furthermore, you also have to keep in mind that the Non-Farm Payroll announcement comes out on Friday, which is a very volatile time of trading. However, this it’s up a nice potential trading opportunity, and therefore I am watching this chart when the noise comes out of the United States.
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