USD/CHF continues to tread water under the all-important 0.93 level as the market dynamics are pushing people away from risk, and into safety overall. The Swiss Franc used to be a safe haven currency, but with the Swiss National Bank actively working against the appreciation of the Franc, it no longer can be thought of as “safe” to own. The US dollar is the last safe haven, so it makes sense to think that the pair should rise.
The 0.93 level is a massive resistance level, so breaking through will be difficult, but over time, we think it should happen. The recent lows are much higher than the previous one, and as a result we think this shows real buoyancy to the pair. The pair will struggle, but as long as there is fear in the market, the Dollar will be the natural trade for most traders. This should have the USD/CHF pair reaching 0.95 before too long, and possibly parity after that.
Further compounding the case for a bullish USD/CHF pair is the fact that there are rumors out of Switzerland that the central bank may raise the “floor” in the EUR/CHF pair to 1.25, or even as high as 1.30 or so. This would have a weakening effect n the Franc in general, and could very well push this pair up again. With this possibility, and the willingness of the Swiss National Bank to intervene, this will keep the sellers at bay over time.
We believe the floor in this pair is current at 0.90, and a daily break above the 0.93 level would have the market moving higher. We like buying on a daily close above that level, and are interesting in buying short-term dips in this market as long as we are above the 0.90 level. Until the macroeconomics in Europe change, we think the “fear trade” should continue to serve trader well over time, and we are willing to express this through this very obvious currency trade as the world loves Dollars, and cannot buy and hold Francs presently.