By Christopher Lewis Christopher L.
The U.S. dollar continues to see choppiness on Thursday against the Swiss franc. At this point, with falling rates have worked against the U.S. dollar early in the day, but this is a short-term phenomenon.
USD/CHF
The U.S. dollar has fallen fairly significantly against the Swiss franc during the early part of the trading session here on Thursday as interest rates in America continue to fall. That helps the idea of the carry trade unwinding, but let’s be honest, this is a short-term dip.
The interest rate differential between the United States and Switzerland is still big enough to drive a truck through. With that being the case, and the fact that the Swiss National Bank has no interest whatsoever in trying to tighten monetary policy, it all leads to a higher U.S. dollar eventually. But ultimately, I am more than comfortable buying this dip and adding to a position that I’ve been in for quite some time.
Today was a little different
We have seen a little bit of change in behavior during the trading session, and that probably makes a certain amount of sense, as traders are starting to look at the U.S. dollar through a different prism. But ultimately, I am more than comfortable buying this dip and adding to a position that I’ve been in for quite some time.
The 50-day EMA is down at the 0.8211 level and is rising. That could offer support. I recognize that we are a little bit extended, and ultimately, that is something that continues to see a lot of questions asked about whether or not momentum can continue.
I do not want to own Swiss francs regardless, even if this market starts to fall. I’m not willing to pay the swap at the end of the day, and therefore, I look at this as a market that is long only. If I get a bounce, then I start to buy to add to my already existing position.
My attitude would change if we broke down below the 50-day EMA. I’d probably be hands-off and exit the market completely.
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Christopher Lewis is a technical analyst and market commentator at DailyForex with more than two decades of trading experience in Forex and other leveraged markets. Based in Columbus, Ohio, he specializes in chart-based analysis of major currency pairs, stock indices, commodities, and energy markets, focusing on clear support and resistance levels, trend structure, and risk management. Christopher produces daily written and video analysis for traders who rely on technical setups to navigate volatile market conditions
As seen on: Pairs Of Aces Podcast,The Trader Guy, FXEmpire
