The US dollar has found itself strengthening against the Swiss franc and many other currencies for that matter during the trading session on Thursday. The interest rates in America spiked after Donald Trump gave an address to the nation suggesting that the war is going to last for several more weeks.
Naturally the US dollar climbed on higher rates and with the Swiss franc offering 0% interest that made a pretty easy trade. That being said we now find ourselves at the 200-day EMA and by extension the 0.80 level and this is an area that could end up being a bit difficult to stomach.
Interest Rate Spikes and Technical Barriers
A break above the high from the Tuesday session would confirm for me at least a significant bullish run waiting to happen. I think that ultimately ends up being the case because eventually you are going to have higher rates winning the day not only from a carry trade perspective but from a longer-term perspective.
After all the Swiss franc is considered to be a safety asset although the US dollar is as well but it’s the bond market that’s been driving the dollar higher as of late. We are most certainly at a point of inflection that we need to pay close attention to because I do believe a lot will be settled here.
If we fall from here to the 0.79 level, I think is your first support level followed by the 50-day EMA. If we break out to the upside, we could be looking at the beginning of a rather long-term move although keep in mind this pair does tend to move somewhat slow.
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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.
