The US dollar rallied against the Swiss franc yet again during the trading session on Thursday as the 0.78 level is an area that has been important multiple times.
This is an area that was significantly resistant back in February and now that we have crashed into it, it should not be a huge surprise to see that we've had a little bit of buying pressure.
Keep in mind that the interest rate differential continues to favor the US dollar and will so decisively against the Swiss franc as we are watching the bond markets and the interest rate situation in America. We already know that the Swiss are going to keep their interest rates close to 0 and of course we know that the Swiss National Bank will get involved and sell the Swiss franc if it gets to be too strong.
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In this environment, I think we have to look at the USD/CHF as a market that eventually will go higher, and it's also worth noting that you get paid to own US dollars against the Swiss franc every day and with that being the case, I do think that buyers come in and try to push this market towards the 200-day EMA.
It's just that it may take some time to get there. I don't like the Swiss franc in general and if we do in fact get some type of peace deal in Iran, that takes away the safety bid as well. So not only do you have a positive carry, but you also have the peace dividend disappearing. Ultimately, I like this pair to the upside, but I also recognize that it does tend to be very choppy, so you have to be very patient. This is more or less a longer term.
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