The Swiss National Bank does not worry too much about the Swiss franc depreciating in value against the greenback, because they are much more worried about the Swiss franc strengthening against the Euro, something that it is probably not going to have much of a say in.
- The US dollar has rallied significantly against the Swiss franc during the trading session on Thursday as we have seen a huge move in the greenback overall.
- It looks to me as if the market is going to continue to look at the 0.99 level as a major barrier, and most certainly the parity level after that.
- After all, there is a lot of psychology attached to that figure, and therefore I think you should probably look at the entire area between 0.99 and 1.00 as a huge “zone of selling pressure.”
If we were to break above the parity level, then it’s likely that the US dollar will continue to take off to the upside. The Swiss National Bank does not worry too much about the Swiss franc depreciating in value against the greenback, because they are much more worried about the Swiss franc strengthening against the Euro, something that it is probably not going to have much of a say in. After all, the European Union has a whole litany of issues that are going to cause major problems. However, this is a situation where the 2 central banks are completely divergent, even though the Swiss have recently done a bit of a “token rate hike” to fight inflation.
Greenback Likely to Continue Gaining Ground
The Swiss will find themselves in a very similar situation as the Europeans, as energy is going to continue to be a problem. Don’t believe me? The Swiss are now making it illegal to heat your home above a specific temperature. At this point, I do think that we are forming a bigger bottoming pattern, especially as the 50-Day EMA has offered such a nice short-term support level. Given enough time, I do think that we have a scenario where the market is going to continue to favor the greenback in general anyway, so therefore buying dips at this juncture makes the most sense.
The 200-Day EMA sits just above the 0.95 level and is rising. Ultimately, the greenback continues to be supported due to higher interest rates, something that looks like it’s going to continue going forward. The size of the candlestick is rather impressive, but it’s also worth noting that it failed right at the first major resistance barrier. In other words, I think we are going to “backup” and try again.