USD/CHF Sellers Eye Deeper Losses as Downtrend Persists
Fundamental Analysis and Market Sentiment
The USD/CHF pair remains under pressure as the U.S. dollar continues to weaken amidst rising expectations for a rate cut by the Federal Reserve. This pressure is particularly evident against safe-haven currencies like the Swiss franc, which has retained its strength despite a slight reduction in Switzerland’s trade surplus in July. The market’s preference for safe-haven assets in times of global uncertainty has bolstered the Swiss franc, maintaining its relative strength against a weakening dollar.
The broader sentiment in the market is currently driven by fears of an economic slowdown in the U.S., coupled with the Fed’s increasingly dovish stance. These factors have led to sustained selling pressure on the dollar, especially against currencies like the franc, which benefits from its safe-haven status.
The combination of a fragile dollar outlook and the franc’s resilience suggests that the USD/CHF pair is likely to continue its downward trajectory in the near term. Traders are cautious ahead of potential policy shifts from the Fed and other European central banks, which could further influence the direction of this pair.
Technical Analysis and Oscillators Confirmation
In the four-hour chart, USD/CHF has solidified its downtrend after breaking below its ascending trendline last Friday. The pair is now approaching a critical support level at 0.86021, with selling pressure intensifying. Should the sellers maintain their momentum and breach this support, the path to the next targets at 0.85824 and 0.85671 will open up. Continued downside movement could see the pair reach as low as 0.85343.
Oscillators Confirmation:
The RSI remains in bearish territory, indicating that the selling pressure is still dominant. The MACD also supports this view, with its bearish crossover and downward momentum, further confirming the likelihood of continued declines. The moving averages are aligned in a bearish configuration, reinforcing the downtrend and suggesting that any rallies may be short-lived.
Alternative Scenario
If the buyers manage to defend the support at 0.86021 and push the price higher, the key level to watch would be the resistance at 0.86633. A sustained break above this resistance could signal a potential reversal, but only a decisive move above this level would shift the outlook from bearish to bullish.
Key Levels:
Resistance Levels:
- Resistance 2: 0.86633
- Resistance 1: 0.86336
Current Price (at the time of analysis): 0.86148
Support Levels:
- Support 1: 0.86021
- Support 2: 0.85824
- Support 3: 0.85671
- Support 4: 0.85343
Key Events to Watch
Traders will closely monitor any updates from the Riksbank regarding interest rate changes, as shifts in European monetary policies could indirectly affect the Swiss franc. Additionally, remarks from Federal Reserve officials later today and during the Jackson Hole symposium could significantly impact market expectations regarding future U.S. interest rate policies, thereby influencing the USD/CHF pair.
Conclusion
USD/CHF remains firmly in a downtrend, with further declines likely if key support levels give way under sustained selling pressure. The broader market sentiment favors continued franc strength against a weakening dollar, especially amidst ongoing global uncertainties and dovish expectations from the Federal Reserve. Traders should keep an eye on critical support and resistance levels, as well as any significant policy announcements that could shift the pair’s trajectory.
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