USD/CHF: Playing the bounce

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Most retail traders will ignore the Swiss franc. This is a bit of a shame, because I have been long of USD/CHF for a moment now, and have finally gotten paid a bit beyond the swap.

There are multiple reasons to go long the USD/CHF pair at the moment, not the least of which is a simple bounce from massive support just below. In fact, I expect that if we break above the 0.90 level, there will be even more upside coming. The technical analysis certainly suggests that we could see a bounce, and therefore I believe this is a trade that has potential for a longer-term run.

10 year yields in the US have been rising, and the Swiss National Bank has made is clear that negative rates are here for the long run in Switzerland. That in and of itself should give a bit of a boost to this pair, but one should also note that the US Dollar Index is near massive support in the form of the 88-90 region, an area that has been stubborn for some time now.

I am expecting a shot at something close to 1.00 in this pair, if history has anything to say about it. After all, where is this inflation that we are expected to see in the US? Nowhere. Also, the idea that the economic recovery is going to be automatic after the vaccine ignores the fact that there are hundreds of thousands of businesses around the world that are gone, and won’t return suddenly. Anyway, this is the chart I am looking at…

USD/CHF monthly chart.

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