USD/CHF Forecast: Testing Key Support

• The US dollar has been hammered against the Swiss franc during the session here on Thursday, but it's probably worth noting that it's a counter trend move, and I have this really difficult time thinking that things have suddenly changed.
• In fact, inflationary numbers coming out of the United States are actually hotter than anticipated so I think it's probably only a matter of time before people start paying close attention to those interest rate differentials and where the bond markets might go.
• The Federal Reserve is likely to sit still for a majority of the year, if not the entire year, while the Swiss have already cut interest rates by 50 basis points in a bit of a panic move. After that happened, we've seen the Swiss franc get beaten up quite a bit.

How Long Does this Last?

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But at this point in time, I think we had a little bit of a relief rally, not only for the Swiss franc, but for multiple other currencies that had been struggling against the US dollar as well, such as the British pound or the euro, for example. So, at this point in time, I am looking very closely the area underneath that we currently see a lot of support at near the 0.90 level. The fact that the 50 day EMA sits right there is probably worth paying close attention to as well. With this, at the first signs of a bounce, I'm more than willing to start buying again. And I recognize that in the longer term, it's very likely that if we can break above the 0.92 level above, it is a major breakout just waiting to happen.

After all, when you look at longer term charts, 0.92 in the dollar against the Swiss franc has historically been very important. With that, I think we are just building up the necessary inertia to perhaps break out, but I am open-minded enough to understand that we could have a bit of a safety trade that benefits the franc. As things stand right now, I'm just watching the 0.90 area for another opportunity to start buying again.

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