FX Play of the Day: Is the Dollar in for More Pain Against the Franc?

USD/CHF was respecting a downtrend line as early as mid-March.

Then, 2 weeks ago, enough bulls appeared to defend 0.8860 and now the pair is playing a descending triangle on the 1-hour time frame.

Will USD/CHF finally break out of its consolidation range?

It will likely depend on how traders react today US GDP report.

Markets currently expect Uncle Sam’s growth to reach 2.0% in the first quarter of 2023, which is slightly slower than the 2.6% rise in the fourth quarter.

but, GDP of the Atlanta Federal Reservewhich is a running estimate of real GDP growth based on available economic data, sees first-quarter GDP at 1.1% As of April 26. This is a significant downgrade in the rankings from their estimate of 2.5% on April 18th and the 2.0% growth that analysts are expecting!

Nor does it help the dollar’s case that investors still have concerns about the banking sector and the debt ceiling.

If today’s US GDP report comes out as weak as the GDP tracker now indicates, the US dollar could lose points across the board including against the Swiss Franc.

USD/CHF traders can take cues from the trend line and static 100 SMA resistance areas and pull the pair back to April lows.8860 or even fresh monthly lows.

The average daily volatility of USD/CHF is around 65 pipsso the trip to .8860 will be easy in the event of a sudden drop in GDP.

USD sellers anticipating further dollar weakness can extend at current levels, place stops just above the trend line, and then target earlier lows.

Not very confident about selling the US dollar these days? You can also wait for a bit of momentum or even a clear break below the triangle support before you can consider riding the downtrend in USD/CHF.