- The 0.79 level has been like a floor in the market. Over time, I think the threat of the Swiss National Bank intervening is a real supportive factor for the US dollar.
USD/CHF
The US dollar has been all over the place during the trading session here on Friday as we continue to see a lot of choppy behavior. That being said, you need to keep in mind that this is the day after New Year’s Day, and that of course means that there is almost no real volume. If that’s going to be the case, then it makes a lot of sense that we will continue to see traders looking for some type of direction.
Consolidation and SNB Intervention
When you look at the longer-term charts, it’s hard not to notice that the 0.79 level has been like a floor in the market. While the Swiss are worried about the Euro primarily, the reality is that the US dollar is how traders measure the strength of the franc in international trade.
Right now, it looks like we are still in the middle of a consolidation range between 0.79 and 0.8150. As we are at the bottom of this range, I am looking for opportunities to buy the US dollar. You get paid a positive swap at the end of every day to be patient, and that’s how I’m looking at this. I don’t necessarily want to short this pair, and I think if we break significantly below 0.78, that probably triggers the Swiss National Bank into action. So, although the US dollar has been a bit soft against multiple currencies, the reality is, I think this one might be a bit of an outlier. At this point, I am “long-only” in the USD/CHF pair but am not looking for massive moves anytime soon.
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Christopher Lewis has been trading Forex and has over 20 years experience in financial markets. Chris has been a regular contributor to Daily Forex since the early days of the site. He writes about Forex for several online publications, including FX Empire, Investing.com, and his own site, aptly named The Trader Guy. Chris favours technical analysis methods to identify his trades and likes to trade equity indices and commodities as well as Forex. He favours a longer-term trading style, and his trades often last for days or weeks.
