The US dollar tried to rally again on Thursday, as we continue to see the carry trade work out here. However, gravity looks as if it has returned at this point in time.
USD/CHF
The US dollar tried to rally a bit but turned around to show signs of hesitation as we drifted lower against the Swiss franc. That's not a huge surprise because we are a little overextended, and I do think that the 0.80 level is an area that's going to be worth watching as it is a large round, psychologically significant figure, and it's an area that I think will continue to be highly interesting. That's an area that will continue to see resistance and now, on a pullback, should be support.
The 0.80 Support Level and Value Hunting Opportunities
Market participants continue to see value in the US dollar, and despite the fact that it was negative during the session on Thursday, the reality is that you get paid at the end of every day to hold this trade. As a result, I think value hunters continue to look at these dips as buying opportunities.
Keep in mind that the Swiss National Bank has no interest in a strengthening franc, and while they are nowhere near an intervention level, the reality is it does put the brakes on the Swiss franc strengthening over the longer term.
The United States dollar is getting a little bit of a boost due to the idea that the Federal Reserve could raise rates as many as 3 times between now and the end of the year, according to some estimates, but I think the general consensus is still somewhere around 1 interest rate hike. As you get paid to hold on to the US dollar and, quite frankly, the US economy looks fairly strong, it does make sense that we continue to go higher; we're just a little overbought at this point.
A drop and a bounce, I am interested in buying on the right-hand side of the V to add to an already existing position.
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