- During the trading session on Monday, we have seen the Atlanta Federal Reserve released a statement that the GDP and the economy in the United States is going to start taking.
- Whether or not that’s true remains to be seen, because the Federal Reserve is actually horrible about predicting anything.
- Nonetheless, even if we do get a slowdown, it’s likely that we will see a certain amount of US dollar strength due to that in general.
Granted, this is probably not the pair were you would see that in a recessionary issue, but the interest rate differential between both of these currencies remains pretty wide, and that of course has a major influence on this pair, just as it does on every other one.
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Technical Analysis
The technical analysis for this USD/CHF pair is somewhat difficult to get a handle on, because while it has been very bullish until recently, we are also testing a major resistance barrier in the form of the region between the 0.90 level and the 0.92 level. With that being the case, I think you have a situation where traders will continue to look at this through the prism of whether or not the US dollar is going to continue to get hammered against everything, or if we will finally get some type of trend. Right now, we have nothing remotely resembling the trend in most markets, and this pair of course won’t be any different.
With the Swiss National Bank cutting interest rates by 50 basis points in a bit of a panic move recently, then this also puts a little bit of downward pressure on the Swiss franc overall, and with that being the case, I think the market will continue to naturally favor the upside, unless of course we see something really ugly. In general, I still favor the overall upside, but I would need to see the US dollar break above the 0.9050 level, before I would get excited about putting any more money to work. If we were to break down below the 0.89 level, then we will be below the 200 Day EMA, and we could see a significant sell off as it could signal that the resistance barrier has held yet again.
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