The recent policy divergence between the Swiss National Bank and the Federal Reserve sent USDCHF lower. In fact, the Fed halted the tightening cycle at 5.00-5.25% as it wants to see more data before deciding on another rate hike, while the SNB remained hawkish as Jordan’s governor remained determined to bring inflation down to target. And not to back down now because of the risks of second and third round effects.
Technical analysis of USDCHF – daily timeframe
USDCHF daily
On the daily chart, we can see that since it was rejected at the 0.9122 resistance and dropped below the trend line, USDCHF has sold towards the 0.89 handle. The moving averages crossed again to the downside, which should be a signal of a trend change, and the price pulled back to the blue 8 moving average, which made the trend more balanced.
Technical analysis of USDCHF – 4 hour time frame
USDCHF 4 hours
On the 4 hours chart, we can see that USDCHF is in a strong resistance area where we can find the previous swing low, 38.2% Fibonacci retracement level and the 0.90 psychological round number. This is where sellers should enter the market with a defined risk above the 0.90 handle, targeting the 0.8858 support.
Technical analysis of USDCHF – 1 hour time frame
USDCHF 1 hour
On the hourly chart, we can see that the price is heading higher within an ascending channel. The red 21 moving average was also acting as a dynamic support for the buyers, so a break below that would get them into trouble. In fact, if USDCHF breaks to the downside, we are likely to see more sellers piling in to extend the decline to the 0.8858 support level. On the other hand, buyers will need to break the 0.90 high to accumulate with more conviction and target the 0.91 handle.
Today we will hear from Fed Chair Powell testifying before Congress. Tomorrow, we have the SNB policy decision, the central bank is expected to raise interest rates by 25 basis points, and later we will see US jobless claims. Finally, we close out the week with the US PMIs on Friday.
