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Is it just me or is USD/CHF’s short-term range REALLY looking good these days?

As you can see on the chart below, USD/CHF is testing the .9650 minor psychological handle, which also coincides with last week’s low. In fact, the pair hasn’t broken below the area in a month! Stochastic has also just left the oversold area, which increases the odds of dollar bulls stepping up their game against the franc.

USD/CHF: 1-hour Forex Chart
USD/CHF: 1-hour Forex Chart

On the fundamental side, I’m keeping my eyes glued to the tube for any news about Deutsche Bank. See, the banking giant recently found itself deep in hot water after being heavily fined by the U.S. Department of Justice. Investors are worrying that the bank would soon call S.O.S. and ask for a bailout. Cue investors cutting their exposure and market players selling its stock like there’s no tomorrow (for the company, at least).

Despite the flight to CHF, the euro region’s favorite safe haven, USD/CHF remains supported around the range bottom. If the Deutsche Bank headline subsides or finds a favorable conclusion (read: bailout), then we might see a franc selloff that would boost the pair. It also helps that the NFP week is coming up and, with the Fed members mostly hawkish in their statements, it won’t be a stretch to expect strong numbers for the upcoming release.

If USD/CHF does start to bounce, then a long trade around its current levels with a tight stop and a profit target near last week’s high might make for a good reward-to-risk trade. This will be a short-term trade though, with the aim to close any position before the actual NFP release.

What do you think? Is this a setup that you would trade for yourself? Which levels should I watch out for?

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