USD/CHF Eyes Higher Targets on Treasury Yield Surge

Market Overview

On Wednesday, USD/CHF traded higher as investor sentiment shifted toward expectations of a potential victory for Donald Trump in the upcoming elections. This belief has fueled a rally in the U.S. dollar and increased U.S. Treasury yields, bolstering demand for the greenback. Trump’s policy stances, such as imposing tariffs and restricting illegal immigration, are likely to trigger inflationary pressures, prompting the Federal Reserve to keep interest rates elevated for longer. As a result, the dollar continues to attract buying interest in the foreign exchange market.

Technical Analysis

In the 4-hour timeframe, USD/CHF maintains a primary bullish trend that began on September 30. After a brief pause last week, buyers resumed their push higher, breaking the resistance at 0.86634. The price subsequently cleared additional resistance levels at 0.86685 and 0.86750, reinforcing the upward movement. Immediate targets for the pair now stand at 0.86821, followed by 0.86937 and 0.87124. Technical oscillators are supporting the bullish momentum; price action remains above the moving averages, with a noticeable bullish divergence between the 34 and 100 weighted moving averages. The RSI indicates continued buyer strength, while the MACD also remains in positive territory, signaling the likelihood of further gains.

Alternative Scenario

The alternative scenario will be triggered if the pair falls below the key support level at 0.86447, which could open the path to further downside movement.

Key Levels Overview

Resistance Levels:

• Resistance 1: 0.86821
• Resistance 2: 0.86937
• Resistance 3: 0.87124

Current Price: 0.86800

Support Levels:

• Support 1: 0.86750
• Support 2: 0.86685
• Support 3: 0.86634
• Support 4: 0.86447

Key Events to Watch

USD/CHF is likely to see volatility today as a series of important U.S. economic events unfold. A speech by a member of the FOMC could provide insights into the Federal Reserve’s future policy direction, influencing the dollar’s trajectory. Additionally, the release of existing home sales data for September, expected at approximately 3.88 million units, will offer clues on economic health and interest rate projections. The Crude Oil Inventory Report, including Cushing oil stock levels, might indirectly affect the dollar by influencing broader risk sentiment. Finally, the Beige Book report, detailing the economic conditions across various U.S. regions, will be a key determinant of the dollar’s movement, potentially impacting the USD/CHF pair.

Conclusion

USD/CHF remains poised for further gains following the breakout, with immediate resistance levels in focus. A sustained move above 0.86821 would validate the bullish outlook, while a breakdown below 0.86447 could introduce a downside risk.