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USD/CHF Recovery Could Be Capped Near 0.9780

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Technical analysis of Forex market

Key Highlights

  • The US Dollar found support near 0.9650 and recovered against the Swiss Franc.
  • There is a key bearish trend line in place with resistance at 0.9775 on the 4-hour chart of USD/CHF.
  • The Swiss Consumer Price Index remained flat in August 2018 (MoM).
  • Today, the US Trade Balance figure will be released for July 2018, which is forecasted to post a deficit of $-50.1B.

USDCHF Technical Analysis

The US Dollar was under a lot of pressure in August 2018 after it failed to break the 1.0000 resistance against the Swiss franc. The USD/CHF pair tumbled and broke the 0.9850 and 0.9700 levels before finding support.

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Looking at the 4-hours chart, the pair started a downside move from the $0.9985 swing high and settled below both the 200 simple moving average (green, 4-hours) and the 100 simple moving average (red, 4-hours).

During the decline, many bearish patterns were formed, resulting in a push below the 0.9700 support. The pair finally found support near the 0.9650 level and started a decent recovery.

It broke a contracting triangle pattern with resistance at 0.9700 and moved higher. It also climbed above the 23.6% Fib retracement level of the last decline from the 0.9866 high to 0.9651 low.

On the upside, there is a key bearish trend line in place with resistance at 0.9775 on the same chart. Moreover, the 50% Fib retracement level of the last decline from the 0.9866 high to 0.9651 low is near 0.9758.

Therefore, if the pair continues to move higher, it is likely to find a strong selling interest near the 0.9760-0.9780 zone. A daily close above 0.9800 could push the pair back in a positive zone for a run to 0.9900.

Fundamentally, the Swiss Consumer Price Index for August 2018 was issued by the Swiss Federal Statistical Office. The market was looking for no change in the CPI compared with the previous month.

The actual result was similar to the forecast and better than the last decline of 0.2%. The yearly change was 1.2%, similar to the forecast and the last reading.

Overall, the USD/CHF pair is showing recovery signs, but it won’t be easy for buyers to surpass the 0.9760-80 hurdle.

Economic Releases to Watch Today

  • Germany’s Services PMI for August 2018 – Forecast 55.2, versus 55.2 previous.
  • France Services PMI August 2018 – Forecast 55.7, versus 55.7 previous.
  • Spanish Services PMI for August 2018 – Forecast 52.1, versus 52.6 previous.
  • Euro Zone Services PMI for August 2018 – Forecast 54.4, versus 54.4 previous.
  • UK Services PMI for August 2018 – Forecast 53.9, versus 53.5 previous.
  • BoC Interest Rate Decision – Forecast 1.5%, versus 1.5% previous.