On the daily chart below, we can see that USDCHF has recently broke out of the major downward trendline and has now extended towards the 0.91 handle. The moving averages have crossed to the upside confirming the change in trend. The rally has come amid strong US economic data in May that have made the market to reprice interest rates expectations on the hawkish side. In fact, the market is now giving a 65% probability for a 25 bps hike at the June meeting. This can all change with the next NFP and CPI reports of course, so traders will be very attentive to those two releases.
USDCHF Technical Analysis
On the 4 hour chart below, we can see that USDCHF has recently bounced again on the upward trendline, as that has been a strong support since the price bottomed in early May, and kept offering buyers good entry points. We can notice that now the price is diverging with the MACD right when it approaches the resistance at 0.91. This is generally a sign of weakening momentum often followed by pullbacks or reversals. In this case, we may get a pullback either to the broken resistance turned support at 0.9070 or even better the upward trendline.
On the 1 hour chart below, we can see that we have a strong support zone at the 0.9070 level. In case USDCHF pulls back, the buyers will be leaning on that level with a defined risk just below it and target the breakout of the 0.91 handle for new highs afterwards. The sellers, on the other hand, should defend the 0.91 handle here targeting new lower lows and thus offer the pullback to the support zone.
As mentioned above, the trend is bullish, so the sellers will have much more work to do before getting back the control. In fact, only a break below the upward trendline would switch the bias to the downside and see the sellers piling in more aggressively.
