Image by jhyerczyk via Flickr
The June Swiss Franc is trading firm after soaring to a new high overnight at 1.1721. The rally took out the old top at 1.1697, further solidifying the new main bottom formed at 1.1177 on May 13th. Additional support is being provided by a steep uptrending Gann angle at 1.1577. Holding above this angle will keep this solid uptrend intact. Breaking the angle will weaken the uptrend, but will not turn it lower.
The move in the Swiss Franc put the currency at an all-time high versus the U.S. Dollar. Signs that the U.S. economy may be slowing is the main reason behind this morning’s rally. Treasury yields have also been falling, making the higher yielding Swiss Franc a more attractive investment.
As long as the debt issues in the Euro Zone continue to persist, investors are likely to pursue the long-side of the Swiss Franc. Not only is the currency perceived as a safe haven, the Swiss economy is continuing to grow at a stronger pace.
Debt issues in the Euro Zone and a slowing economy in the U.S. are making it easy for investors to choose the Swiss Franc as the current “go to” currency. Based on the renewed strength in the Euro versus the Dollar, however, it appears that investors are fairly certain that Europe will resolve its issues while the U.S. economy is likely to have a hard time gaining strength once the Fed stops providing stimulus at the end of June.
The strong uptrend is the Swiss Franc is likely to prevail over the long-run although short-term overbought conditions may trigger reasonable corrections from time to time. Unless the U.S. economy makes a quick reversal in trend, expect the Swissy to maintain its solid upward pace versus the Greenback.
