The recent policy divergence between the SNB and the Fed has sent the USDCHF pair lower. In fact, the Fed has paused its tightening cycle at 5.00-5.25% because it wants to see more data before making a decision on another rate hike, while the SNB kept on being hawkish as the Governor Jordan remained adamant on getting inflation down to target and not backing off now because of the risk of second and third round effects.
USDCHF Technical Analysis – Daily Timeframe
On the daily chart, we can see that since being rejected at the 0.9122 resistance and falling below the trendline, USDCHF sold off towards the 0.89 handle. The moving averages have again crossed to the downside, which should be a signal of a change in trend, and the price has pulled back to the blue 8 moving average, which brings the trend into more equilibrium.
USDCHF Technical Analysis – 4 hour Timeframe
On the 4 hour chart, we can see that USDCHF is at a strong resistance zone where we can find a previous swing level, the 38.2% Fibonacci retracement level and the 0.90 psychological round number. This is where the sellers should enter the market with a defined risk above the 0.90 handle and target the 0.8858 support.
USDCHF Technical Analysis – 1 hour Timeframe
On the 1 hour chart, we can see that the price has been trending upwards within a rising channel. The red 21 moving average has also been acting as dynamic support for the buyers, so a break below it would spell trouble for them. In fact, if USDCHF breaks to the downside, we are likely to see more sellers piling in to extend the fall into the 0.8858 support. The buyers, on the other hand, will need to break above the 0.90 high to pile in with more conviction and target the 0.91 handle.
Today we will hear from Fed Chair Powell as he testifies to Congress. Tomorrow, we have the SNB policy decision, where the central bank is expected to hike rates by 25 bps, and later on we will see the US Jobless Claims. Finally, we conclude the week with the US PMIs on Friday.
