USD/CHF: Buyers Target Key Levels Ahead of PMI Data Release
Market Overview
The USD/CHF currency pair is on track to extend its weekly gains as the U.S. dollar regained strength, recovering from prior losses. Political uncertainties in France and South Korea have weakened rival currencies, which has bolstered the demand for the safe-haven dollar. Additionally, the higher interest rate advantage of the U.S. dollar compared to the Swiss franc has contributed to an increased appetite for the greenback.
Technical Analysis
The USD/CHF pair, in the four-hour timeframe, is demonstrating a robust continuation of the upward trend that began in early November. Buyers have driven the pair higher after the rebound from the support at 0.88293, positioning themselves to challenge the immediate resistance at 0.88883. A confirmed break above this resistance could pave the way for further upward movement, with the next key targets at 0.89127 and subsequently at 0.89248.
Oscillators Confirmation
Momentum indicators add further weight to this bullish scenario. The Relative Strength Index (RSI) is trending in the positive zone, indicating sustained buying interest. The MACD also remains in bullish territory, reflecting positive momentum, while moving averages are showing a mixed but improving setup, hinting at possible consolidation before further gains.
Should buyers manage to push beyond 0.88883, additional resistance is likely to emerge at 0.89248, followed by a critical level at 0.89473, which could define the short-term trend direction.
Alternative Scenario
However, failure to breach 0.88883 could see the pair retrace towards the initial support at 0.88658. A break below this level would lead the price back to the key support at 0.88293, which would invalidate the ongoing bullish scenario.
Key Levels
- Resistance Levels: 0.88883, 0.89127, 0.89248, 0.89473
- Support Levels: 0.88658, 0.88293
Key Events to Watch
Investors will closely monitor the ADP private employment report from the United States, expected to provide insights into the labor market’s cooling trajectory. The report is critical in setting expectations for the broader employment figures later in the week. Additionally, the U.S. PMI figures and Federal Reserve Chair Jerome Powell’s speech are expected to add further volatility to the pair, with any dovish commentary likely to temper the dollar’s recent strength.
Conclusion
USD/CHF retains a bullish outlook with buyers targeting the key resistance at 0.88883. Successful breaches of resistance could drive the pair higher towards 0.89248 and beyond. Conversely, a failure at current levels could lead to a pullback towards key support at 0.88293.
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