The US dollar fell early against the Swiss franc on Friday but found buyers underneath to get long again. Ultimately, this is a market that is trying to break out.
USD/CHF
The US dollar continues to see a lot of volatility against the Swiss franc on Friday as we initially started to sell off, but we have turned around to show signs of life. At this point, we are hanging around the 0.81 level. This is the magnet for price over the last several days, and to end the week at that level is not a huge surprise.
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If we were to break down below the 0.8050 level, then it's possible that the market could really start to drift lower, perhaps heading toward the 200-day EMA. On the other hand, if we break above the high of the week, then I think that allows the US dollar to continue to grind towards the 0.8250 level.
Fundamental Drivers and Interest Rate Differentials
The interest rate differential, of course, favors the US dollar, and it will continue to do so despite the fact that the US interest rates have been drifting a little bit lower. The Swiss National Bank, of course, is okay with the idea of the Swiss franc losing some value, and we are at historically low levels in this pair despite the fact that it's been so bullish as of late.
I continue to buy this USD/CHF pair on dips, and I think it's probably only a matter of time before we break out. If and when we do, I think that you could see a relatively quick move, but keep in mind that in general, this is a market that grinds a bit more than it makes impulsive moves.
So, patience may be needed, but we could very well get a sudden lurch higher—that happens at times here. But the fact that you get paid at the end of every day makes it an easier pair to hold onto, as I have been for quite some time.
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