- During my daily analysis of the major currency pairs around the world, the first thing I try to get a grasp on is what’s going on with the US dollar.
- After all, in order to be a major currency pair, the market must feature the US dollar.
- At this point, it looks like the USD/CHF pair is telling us that there are a lot of questions to be asked about the trend of the US dollar right now, and it’s also possible that we are at a technically important level that could tell us where we are going to go for the next several months.
Technical Analysis
The technical analysis for this USD/CHF pair is still bullish, although we are just barely hanging on. That being said, we have to be very cautious, as the 0.92 level above is an area of massive resistance going back multiple times over the last couple of years. However, we also have the 200 Day EMA underneath offering support, and as we are between the 200 Day EMA and the 50 Day EMA, you will quite often see a lot of noisy behavior in that area on the chart.
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Furthermore, you also have to keep in mind that interest rates in the United States are starting to drop a bit, as traders believe that the United States may be a little bit sluggish at the moment, prompting the idea that rates will fall as the Federal Reserve might get involved. However, looking at leading indicators, it seems as if inflation will probably re-accelerate in the United States later this year, leading to a massive “whipsaw” in the bond market, and by extension, the US dollar. Because of this, I am very cautious about shorting the greenback right now, although that might actually be the trade for the next several weeks.
On the other hand, if we were to break above the 50 Day EMA, which is just above the crucial 0.90 level, then I think you have an attempt to get back to the 0.92 level. For what it is worth, the Swiss National Bank recently cut interest rates by 50 basis points in a bit of a panic move, so we will have to watch to see what the SNB has to say going forward.
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