The Us dollar has rallied against the Swiss franc on Friday again but continues to see a bit of a ceiling just above.
USD/CHF
The U.S. dollar rallied against the Swiss franc initially during trading on Friday as the CPI numbers came out hotter than anticipated, with the core CPI month-over-month reading at 0.3%, as opposed to the expected 0.2% level. That being said, it now looks as if the market is pricing in the idea of the Federal Reserve raising rates next week on Wednesday. Therefore, those types of numbers may be starting to lose a little bit of their efficacy on market behavior.
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That being said, I would also point out the other side of the equation, with the Swiss National Bank hanging on to zero interest rates despite the fact that recently we have seen GDP and inflation numbers out of Switzerland come in a little hotter than anticipated.
Ultimately, this is a market that continues to bang up against the ceiling.
The 0.82 level looks to be the ceiling at the moment. The interest-rate differential continues to favor the United States and will only widen next week, so it does make sense that there is a little bit of an underlying bid here.
The 50-day EMA is sitting at the 0.8075 level, with the 200-day EMA sitting at the 0.8015 level. Ultimately, if we can break above the 0.82 level, then it is very likely that the dollar will take off against the Swiss franc for the next leg higher.
We are pressuring a major resistance area going back a couple of years, so this sideways action does not overly surprise me, as it is such a major point of inflection on the charts. This is an area that I think we will continue to see a lot of interest in, as I am a “buy-on-the-dip” type of trader.
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