- The US dollar fell a bit during the trading session on Friday, but we continue to hover around the 50-day EMA.
- We have recently seen a nice bounce, and at this point, I think there are going to be questions as to whether or not the Swiss National Bank is behind some of this.
- After all, we have seen a coordinated sell-off of the Swiss franc, and they are known to get involved in the markets behind the scenes.
That being said, the 0.87 level certainly looks to be technical resistance and I think a lot of people will continue to pay close attention to it. If we were to clear that level, then I think we've got a real shot at making much bigger moves, but right now I just don't see it as being easy. Clearing the candlestick from the Tuesday session opens up the possibility of a move to the 0.8850 level, an area that was a swing high.
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Under 0.86 CHF
Underneath the 0.86 level continues to be support and breaking that opens up a move down to the 0.85 level. While we have been in a downtrend for quite some time when you zoom out and look at long-term charts, such as the monthly chart, every time we've gotten as low as we've hit over the last couple of weeks, the pair has bounced and went all the way to parity. That would be a huge move, but is not out of the realm of possibility if we see US dollar strength longer-term again.
I don't know if that happens, but if you're a longer term buy and hold type of trader, that might be an interesting target. Keep in mind that the US dollar continues to pay more interest than the Swiss franc and you do get paid to hold it, although it's not as big of a windfall as it once was. Regardless, I think this is a situation where you have to look at this through the prism of buying on the dip until we break down below that 0.85 level. At that point, then things look rather bleak. The US dollar does look like it's trying to assert its strength against multiple currencies at the moment. And of course, the Swiss franc has been struggling against many others.
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