It has been hardly a rollercoaster ride in FX this week. Trading ranges remain tight as the holidays are upon us, also the financial markets await the fiscal cliff and more importantly focus on the economy for 2013.
UNCHARTED EASING WATERS
With unlimited easing expected to persist from the United States, China, Japan, and Britain, we are entering unchartered territory. Currencies, equities and commodities remained propped higher by the limitless stimulus flowing in the global markets. This trend may persist in some markets, but possibly not all.
A LOOK BACK
Over the last several years, the Swiss franc has become a safe haven favorite trade during times of a weakening U.S. economy. Since trading at 1.8313, during the fall of 2000, the USD/CHF has been on a steady downward sloping trend that made a record low at .7072 during summer of 2011.
The most recent bullish correction saw price fail at .9971 before steadily resuming its bearish stance. Since making a new 7-month low, price appears poised to continue its swing down. With the likelihood growing that the fiscal cliff will be resolved in time, a potential risk rally may put a pause in this trend continuation.
If price breaks below .9130, downside support lies both at the psychological .9000 level and the bearish trend channel that started from the record high early last decade. A bounce back above .9200 may negate the initial move lower.
From Trader Planet