By FX Empire.com
The USD/CHF pair continues to grind sideways as it has over the last couple of weeks in a very tight range. The pair has seen a nice rally over the last several months, and as a result it probably needed a rest. However, there are some fundamental reasons pushing this pair around as well that you don’t normally see in other pairs.
The weekly candle looks like a doji, and as long as the pair can break above it – the pair could be bought. The selling of this pair simply cannot be done as the Swiss National Bank has a floor in the EUR/CHF pair at the 1.20 handle. Although this isn’t that pair, the intervention that may happen in that pair would have an effect on this pair as well. In other words – this pair has a de facto floor in it as well. With this in mind, we don’t sell this pair.
Also, the US economy is doing fairly well all things considered. The European Union will be weak overall, and this is bad news for Switzerland. The Swiss send 80% of their exports to the EU, and if the EU goes into a recession or even worse – nobody is buying Swiss goods. This cannot end well for Zurich either.
The combination of those factors has us thinking long in this pair, and will proceed to buy on a break of the weekly high as this pair could easily test the 0.95 level again. Beyond that, we actually believe in a parity level print sooner or later too. This should keep us long for the time being, although there is no gain to be had by holding the pair in the form of a swap. However, the Dollar has a much easier path to rising value than the Franc, and that is essentially what currency trading is all about. Until the Swiss National Bank suddenly gives up the floor in the currency market, we can only buy on dips in this pair as the world will more than likely run to the Dollar every time there is trouble out there.
USD/CHF Forecast for the Week of February 13, 2012, Technical Analysis
Originally posted here
