Interest rate differentials keep favoring the US Dollar against the yen, the Canadian dollar and the Swiss franc, FXEmpire analyst Christopher Lewis argues in his July 1 forecast. He sees short-term dips as buying opportunities in USD/JPY and USD/CAD, with USD/JPY holding above the 162-yen level.
The interest rate differential continues to pull traders toward long dollar positions against the Japanese yen, Canadian dollar and Swiss franc, according to FXEmpire's Christopher Lewis. The dollar remains one of the strongest assets in the currency markets, and his July 1 technical read favors the upside on each pair.
USD/JPY holds above 162
The dollar rallied against the yen early Wednesday, and Lewis treats short-term pullbacks as buying opportunities, with the 162-yen level acting as a floor. He has no interest in shorting the pair.
But he expects noise over the next 24 hours. The US jobs report lands Thursday rather than Friday this week, because US markets close Friday for Independence Day.
USD/CAD digests gains near 1.42
Against the Canadian dollar, the pair grinds sideways as it digests the move up to the 1.42 level. Lewis sees the 1.42 area staying noisy but reads any significant dip as a buying opportunity.
USD/CHF eyes 0.82
The dollar keeps strengthening against the Swiss franc, and Lewis thinks it is probably only a matter of time before the pair reaches the 0.82 level. The rate differential again favors the dollar, and the Swiss National Bank appears open to a weaker franc.
A slowing EU could add pressure on Swiss exports. Lewis describes a forming bullish flag whose break to the upside measures a move toward roughly 0.83.
Source: FXEmpire
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