- US dollar–Swiss franc action shows a pullback followed by a sharp rebound, with 0.80 remaining a key psychological and technical area.
- Market volatility persists, but buying on dips appears favored as policy dynamics support USD strength.
The US dollar has pulled back just a bit during the trading session here on Monday, only to turn around and bounce significantly. The 0.80 level is a large, round, psychologically significant figure in an area that also features the 50-day EMA.
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The market is likely to continue to see a lot of volatility, but I also think it's likely that we will continue to see the market show volatility. And ultimately, this is a market that I think we continue to see a lot of buy on the dip type of behavior. After all, it does make it quite a bit of sense that the US dollar continues to climb against the Swiss franc despite the fact that there are rumblings of the Federal Reserve cutting rates because the Swiss National Bank won't deal with this much longer and the Swiss National Bank also has a major interest in seeing the Swiss franc depreciate due to the fact that there has been a bit of hesitation.
Swiss National Bank Influence on USD/CHF
By traders to short this pair, it has a major influence on exports, especially into the European Union. This is a market here that isn't as important to the Swiss as the Euro, but ultimately, we are still looking at a basing pattern. The Swiss franc over the longer term tends to move in the same direction against most currencies.
Even if we break down below the candlestick for the day, the 0.79 level is an obvious floor in this market. If we can clear 0.8150, then I think the US dollar has a real shot at going much higher against the frank. We have seen a bit of a reversal during the day, and I think that tells you there is underlying pressure here.
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