USD/CHF Carry Trade Endures Amid Volatility
The USD/CHF pair has been experiencing choppy behavior in recent times. The US dollar initially rallied at the start of the trading session on Friday but then pulled back, leaving the market somewhat noisy and unpredictable.
Despite this volatility, Christopher Lewis, a technical analyst with over two decades of experience, believes that the carry trade remains alive and well in this pair. He notes that traders are buying higher-yielding currencies and shorting lower-yielding ones, which has been a successful strategy across various markets with the exception of the Bank of Japan's involvement.
Lewis emphasizes the importance of risk management in navigating the current market landscape, particularly given the geopolitical risks emanating from the Middle East. He suggests that breaking above the 0.82 level could send the market to the 0.85 level, but expresses no interest in shorting this pair due to its carry trade dynamics.