Aside from a selloff in the USD/JPY and rally in the GBP/USD, the Greenback is on the march vs majors. Currency players do not seem too concerned about a dovish FED crushing the USD in the intermediate-term. Bids are coming in on behalf of the dollar and rates are recovering from a brutal FED-week sell-off.
At the moment, it is tough to overstate just how bearish the fundamentals are for the USD. Rates hikes appear to be a thing of the past and the FOMC is projecting a forthcoming downturn in the U.S. economy. Factor in the political uncertainty of the 2020 Presidential election, and there are more questions than answers facing the Greenback.
USD/CHF Rallies From .9900
In a Live Market Update from earlier in the week, I outlined a long trading plan for the USD/CHF. The trade fell short of the profit target, only producing 15 pips ahead of Wednesday’s FED announcements. From then on, the bears ruled the day.
Here are a few support and resistance levels to watch in this market for the near future:
- Resistance(1): 38% Retracement, 0.9982
- Support(1): Swing Low, .9894
Bottom Line: Today’s price action in the Swissie suggests that the daily bearish trend may not yet be over. Rates failed to test the 38% retracement level, which is a signal that sellers are still in control of this market.
However, there may be a trading opportunity set up in the coming sessions. Until elected, I will have buy orders in queue from 0.9904. With an initial stop at 0.9989, this trade produces a tidy 15 ticks on a bounce from the 0.9900 level.
The major benefit of going long from just above the Swing Low (.9894) is affordability. The USD/CHF has a tendency to enter rotation after a large move. If this is the case, taking a few pips from prolonged rotation between .9900 and .9950 is a pretty good way to trade the action.