- During the Wednesday trading session, we have seen the US dollar rally a bit against the Swiss franc, but we are still very much in a consolidation area.
- This does make a certain amount of sense considering that we do not really know what to make of the potential tariff war.
- At the same time we have to keep in mind that the Swiss National Bank is extraordinarily loose with its monetary policy.
- As long as that is going to be the case, it does mean that the Swiss franc should be fairly weak against most currencies, perhaps even the US dollar at times.
Technical Analysis
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The technical analysis for this USD/CHF pair is a bit murky at the moment, but it does look a lot like a market that is trying to find some type of floor. The market will continue to be noisy in general, but I think what we have here is a discussion as to whether or not the United States will dip into a recession, or if the situation in America is only temporary.
I suspect it’s the latter of the two, and I also suspect that most traders believe that as well, hence the price action that we see in this currency pair. While the action in the euro has been a bit bullish for the euro itself, Switzerland still has a huge host of issues to deal with at the moment, so I think you’ve got a situation where traders will continue to be very cautious about getting overly aggressive.
It’s worth noting that the 200 Day EMA sits just above, and it near the crucial 0.89 level, as well as the 50 Day EMA which sits just above it. In other words, there is a lot of technical noise above, but you can also make the argument that the 0.8750 level has just witnessed a double bottom, which of course is a pattern that a lot of people will watch closely. In other words, it looks like we are at least trying to turn things around.
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