USD/CHF Struggles to Break Out of Sideways Trend at Six-Month High
Overview of Wednesday’s Market:
The strong growth and sticky inflation in the United States have been key drivers in supporting the dollar against other currencies so far this year. The ongoing uncertainty around this year’s U.S. elections could also favor the dollar as investors seek safe assets. On the other hand, the Swiss franc has remained close to $0.91 per dollar after suffering severe losses in the first quarter due to significant differences in the expected monetary policy paths between the United States and Switzerland. With Switzerland’s annual inflation dropping to its lowest in two years at 1% in March, coupled with pessimistic business confidence and a contraction in retail sales, the Swiss National Bank might consider another interest rate hike in its June meeting.
Technical Analysis:
From a technical perspective, in the four-hour chart, the USD/CHF pair has formed a rectangular sideways pattern at a six-month high, with the strengthening dollar prompting buyers to challenge the ceiling at 0.91416. A sustained move beyond this area could pave the way for reaching levels of 0.91565 and 0.91730. Momentum oscillators indicate an increase in buying strength after a period of attrition. The price is attempting to register a higher peak above the moving averages.
Alternative Scenario:
Conversely, if sellers do not accept higher prices above the pattern’s ceiling, the sideways trend could continue towards the support levels of 0.91133 and 0.90866. A break in the pattern in either direction would signal the start of a new trend.
Influential Events:
Apart from the speeches by European Central Bank officials, the U.S. durable goods orders report is on today’s list of key economic data. Following a weaker-than-expected purchasing managers’ index report on Tuesday, this could attract investor attention.