If we can break above the highs of the trading session on Friday, I think that opens up the Swiss franc to going much higher. At that point in time, I would anticipate that the Swiss franc could go to the 179 yen level. If we were to turn around and break down below the 50-day EMA, the market probably goes looking to the 175 yen level. That of course is an area that previously had been resistant, and therefore, a certain amount of market memory should come back into the picture.

Ultimately this is a market that will continue to be very noisy but overall is still in a huge uptrend. The Swiss franc of course is a low yielding currency but at this point I think it is still preferable over the Japanese yen. You do get paid at the end of the day but it's not a huge differential. With this being the case, I think you've got a scenario where even the lowly Swiss franc probably continues to beat up on the Japanese yen as the bank of Japan has no alternative but to keep their interest rates low for the foreseeable future. With this, I think the buyers come in on these dips as we've seen over the last couple of days, and I remain bullish.

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A battle of lightweights

At this point in time, it’s basically a battle of lightweights and therefore I do pay close attention to this pair because it can give us a bit of a “heads up” as to what funding currency is going to perform better in the carry trade. In other words, if this pair does continue to rally from here, we more likely than not will see the JPY related pairs will continue to rally from here, or at least rally better than the CHF related pairs.

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