USA Dollar

USD/CHF Signal Today – 18/03: USD Tests 200 Day EMA vs CHF

Potential signals: I believe at this point in time the US dollar is getting ready to break out against the Swiss franc. On a daily close above the 0.89 level, I am a buyer with a stoploss at the 0.88 level. My target would be a longer-term one, with parity being the ultimate prize.

  • The US dollar has gone back and forth during the trading session on Friday, as we are now testing the 200 day EMA.

USD/CHF Signal Today - 18/03: USD Tests 200 Day EMA vs CHF (Graph)

The 200 day EMA is an indicator that a lot of people pay close attention to, and it is of course an area that the technical traders out there will pay close attention to as well. Ultimately, if we can break above there, then we could go looking to the 0.89 level, which is an area that has offered a significant amount of resistance previously. If we can break above there, then I think the US dollar is free to go much higher.

Keep in mind that the Swiss National Bank is likely to continue to look at the monetary policy coming out of Switzerland as needing to be loosened, as the Swiss franc has gotten far too strong. In fact, the SNB might be one of the first central banks in the world to start cutting rates as far as the major economies are concerned. If that’s the case, then the Swiss franc will of course continue to get beaten up on. This is especially true against the US dollar, which although the Federal Reserve is likely to cut rates later this year, they are nowhere near being as aggressive as the Swiss will more likely than not be.

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You can also take a look around the world and see the Swiss denominated pears continue to see a lot of upward pressure. All things being equal, this is a market that I do think is in the midst of trying to turn things around for a bigger move, and therefore think you’ve got a situation where a lot of people are going to be jumping into the trade over the longer term.

All things being equal, if we fall below the 0.87 level, then it is likely that we could see more of a selloff. At that point, the market is likely to continue to see a lot of panic, and perhaps a run toward the Swiss franc and some type of safety trade. I don’t see that happening very easily, but ultimately it is something that you need to keep in the back of your mind.

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