Swiss Franc Remains Vulnerable as USDCHF Gains for a 2nd Day

The USD/CHF is up this Thursday, advancing by 0.16% as the greenback maintained the second day of bullish action against its peers. However, the upside move of the day remains capped by a key resistance level in a week that showcases sparse fundamental triggers for both currencies in the pairing. 

Most of the day’s action will occur in the Eurozone, where the ECB is expected to raise interest rates for the first time in more than a decade. This could have implications on the EUR/CHF pair. The ECB is expected to raise interest rates by 25 bps, but there has been some market chatter this week of a potential 0.5% hike. If the ECB hikes by 50bps or more, this could spark a bullish move on the EUR/CHF. The relative weakness of the Swiss Franc in that situation could spill over to the USD/CHF.

The strengthening of the Swissy over the greenback by the SND’s higher-than-expected rate hike has fizzled out in the wake of expectations of more aggressive hiking by the Fed. The next Fed decision will become public in less than a week. This expectation could drive further price action on the pair after today’s ECB move.

USD/CHF Forecast

The failure of the pair to complete the double top pattern resulted from the bounce on the 0.95496 support after the formation of several pinbar candles. This bounce has taken the pair up to the 0.98905 price resistance, from where a decline ensued. Presently, two days of upside price action is now challenging resistance at 0.97203 (4 May and 8 June 2022 low).

A successful break clears the way for the bulls to attain the 0.97957 resistance (3 May and 8 July highs). Above this level, 0.98905 and the double peaks at 1.00404 form additional barriers to the north. On the flip side, failure to break the 0.97203 resistance leads to a pullback that brings 0.96296 into the picture as the immediate downside target.

A breakdown of this level retests the 0.95496 neckline support. If the bulls fail to defend this support, a decline towards the 0.94303 pivot (17 March 2022 peak) will be on the cards. Additional downside targets are found at 0.92953 (28 March and 12 April lows) and 0.91899 (21 March low).

USD/CHF: Daily Chart