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USD/CHF Buyers Eye Key Resistance Levels Amid Diverging Economic Outlooks

USD/CHF Buyers Eye Key Resistance Levels Amid Diverging Economic Outlooks

Market Overview:

The USD/CHF pair has been trading with an upward bias as the Swiss franc continues to weaken against the U.S. dollar. The franc’s decline is primarily driven by the recent rate cuts by the Swiss National Bank (SNB) and market expectations for further easing. In contrast, the U.S. economy remains robust, supported by strong labor market data, which has bolstered the dollar against major currencies. This divergence in monetary policy outlooks, combined with a shift in safe-haven flows toward the dollar, has placed additional downward pressure on the franc.

Technical Analysis and Oscillators Confirmation

In the four-hour chart, USD/CHF is trading within an ascending channel, with buyers recently establishing a higher low at 0.86319. The pair is now challenging the resistance level at 0.86739. A successful break above this level would likely pave the way for an advance towards the 100-period moving average, located around 0.86853. If the bullish momentum persists, further upside targets include resistance levels at 0.86999 and 0.87159.

Oscillator indicators such as the RSI and MACD are both in bullish territory, with the RSI above 60, indicating ongoing buying pressure. The MACD is also positive, with the signal line trending upwards, confirming the current bullish momentum. However, these indicators suggest that while there is still room for upward movement, the pair may face resistance as it approaches overbought conditions.

Alternative Scenario

Should sellers regain control and manage to defend the 100-period moving average, there is potential for the pair to retest the previous low at 0.86319. A break below this crucial support level would signal a reversal, potentially leading to a deeper correction in the pair.

Key Levels:

Resistance Levels:

  • Resistance 3: 0.87159
  • Resistance 2: 0.86999
  • Resistance 1: 0.86853

Current Price (at the time of analysis): 0.86733

Support Levels:

  • Support 1: 0.86579
  • Support 2: 0.86319

Key Events to Watch

On Monday, there are no significant economic releases directly related to the Swiss franc. However, market participants will be closely monitoring the U.S. Consumer Inflation Expectations report from the Federal Reserve and the auction of three-month and six-month U.S. Treasury bills. These events could influence market sentiment and USD/CHF movements, particularly if they provide insights into the future direction of U.S. monetary policy.

Conclusion

The USD/CHF pair remains in an upward trend, with technical indicators and oscillators supporting further gains. However, traders should watch key resistance levels closely, as a failure to break through could lead to a pullback. The upcoming U.S. economic reports and market sentiment will likely play a crucial role in determining the pair’s direction in the near term.

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