- During the trading session on Wednesday, it looks like we are going to continue to see a lot of upward momentum, as we initially pulled back.
- After the CPI came out hotter than expected, measuring 0.4% in the Core CPI numbers instead of the expected 0.3%, the US dollar took off to the upside and it looks like we are ready to go much higher.
In general, this is a market that has been consolidating for a while and now looks as if it is trying to form a massive “W pattern.” Ultimately, the 0.90 level underneath is a major support level, with the 0.92 level above a significant resistance barrier. If we can break above the 0.92 level, then the market is likely to go much higher, perhaps looking at a “measured move” of the US dollar reaching the 0.94 CHF level.
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Holding Pattern
At this point in time, the market is in a bit of a “holding pattern”, as we continue to determine whether or not we are going to finally break out and see the US dollar really overtake the Swiss franc. After all, the Swiss National Bank has recently cut interest rates by 50 basis points, and with the CPI numbers coming out hotter than anticipated, it makes quite a bit of sense that we would see the Federal Reserve remains somewhat hawkish, and therefore think you got a situation where the US dollar will continue to strengthen against the lowly Swiss franc.
Furthermore, the Swiss economy sends 85% of their exports into the European Union, which of course is a bit of a mess at the moment. In other words, there are multiple reasons why the Swiss franc probably softens from here, but it does make a certain amount of sense that we would eventually continue to see the US dollar strengthen against not only the Swiss franc, but probably most currencies in the region. I like the idea of buying dips going forward, just as I have been doing for a while.
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