Dollar Rebounds Against Franc Amid Carry Trade Pressures

US dollar's initial plunge against the Swiss franc on Thursday has been met with a bounce in the New York session, according to technical analyst Christopher Lewis. The US dollar had dropped significantly early in the day but found support near the 50-day EMA.

The 50-day EMA is a closely watched indicator, particularly as investors await the Federal Reserve's interest rate decisions. Despite Fed Governor Waller's statement that he favors holding rates steady, energy inflation remains a concern globally.

Lewis believes the carry trade is still alive in the US dollar versus Swiss franc currency pair, leading to stabilization and upward pressure. He notes that central bankers are trying to discourage traders from this trend, but bond markets are punishing multiple countries simultaneously.

Japan's intervention in the currency market by selling the US dollar has had a knock-on effect, but its sustainability remains uncertain. The Swiss National Bank is seen as one of the most stable institutions, maintaining a 0% interest rate policy and making no moves to tighten.