The US dollar rallied to kick off the trading session on Friday but has since pulled back a bit to continue the choppy behavior we have seen in the USD/CHF pair for some time now.
USD/CHF
The US dollar initially tried to rally during the trading session on Friday but turned around to show signs of hesitation. With that being the case, the market remains somewhat noisy and choppy, but I do recognize that we have a situation where traders look at this as a market that is a carry trade.
I like buying dips. I like holding the position that I've had for months. I buy in little, tiny increments and just build up. I'm not trying to guesstimate where the market's going to go in the next 12 hours. We are in the midst of forming a bit of a rounded bottom.
Carry Trade and Geopolitical Risks
And the carry trade has worked out across the board with the exception of the Bank of Japan getting involved. It's been a pretty straightforward scenario that we find ourselves in: buying higher-yielding currencies, shorting lower-yielding ones for a couple of months now, and that does make a certain amount of sense considering that it's probably the only thing you can truly count on in the sense that headlines could move the markets rather rapidly coming out of the Middle East, and we don't know how Monday opens up.
So, risk management, of course, comes into the picture and makes a big difference as well. If we were to break above the 0.82 level, then that is another breakout that could send this market to the 0.85 level. I've got no interest whatsoever in shorting this pair as the carry trade is alive and well, and continues to be a major driver of where we are going in general.
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