The US dollar saw an initial rally against the Swiss franc on Tuesday, but retreated as it hit a short-term barrier at the 0.91 level. However, there is strong support below, with the 50-Day EMA acting as significant support. Many traders are eyeing the 0.90 level as a potential area to boost the market.
Despite the US dollar’s strength against other currencies, the Swiss franc is proving to be a tough opponent. The Swiss National Bank recently cut rates, while the Federal Reserve is expected to maintain a tight monetary policy. This interest rate differential suggests that the USD/CHF pair will eventually break out. Traders have been buying into this market to take advantage of the daily swap, but the resistance has been persistent. Patience and caution are advised, as this market requires a long-term investment approach rather than quick trades.
The Swiss franc is considered a funding currency globally, indicating that the US dollar may eventually rally against it. Traders are also keeping an eye on other pairs involving the Swiss franc, such as GBP/CHF and NZD/CHF. While the market may experience volatility and choppiness, a breakout to the upside could lead to a significant decline in the Swiss franc’s value. However, the possibility of a financial crisis remains a concern. Currently, buying short-term dips in this pair seems to be a favorable strategy.