USDCHF

USD/CHF On Course to Retrace Below 0.9300, But Recovery Remains Possible

The USD/CHF pair pulled back slightly from its multi-month tops, as traders bullish on the greenback took some profits this Tuesday. Bond yields are also retreating, which seems to be the trigger for the profit-taking activity. 

Risk-on sentiment remains high, which could limit the retracement move on the USD/CHF pair. The prospects of a faster recovery of the global economy, buoyed by the upbeat US NFP report on Friday, continue to support the dollar. With the Johnson & Johnson COVID-19 vaccine also in play, the Swiss Franc may not find the going easy in the short-term. 

According to analysts at Credit Suisse, the pair is taking a breather following the strong swing upwards. The bank expects short-term support levels at 0.9328, below which 0.9285 becomes the next market floor, followed by 0.9141/22.

The bank also projects that a move above the 0.9376 resistance could trigger a reassertion that targets 0.9398/0.9400, with a potential for 0.9468 if the cap at 0.9398/0/9400 is removed. How accurate are these key levels called by Credit Suisse? See the chart below. 

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Technical Outlook for USDCHF

Price is indeed retracing intraday following days of steep strengthening. The overdue correction is in line to target the 0.92859 resistance level. A bounce on this area that targets and gets rejected at 0.93684 forms a potential double top, with 0.92859 as the neckline. A decline below this level completes the topping pattern, allowing the pair to hit 0.91899, with 0.92264 serving as an adjoining target to the south (red arrows).

On the other hand, a bounce at 0.92859 that ends up uncapping 0.92684, allows the USDCHF to extend the upside towards 0.94580. We could then have a chequered push to the upside, bringing 0.95496 into the picture (blue arrows). 

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USD/CHF Daily Chart

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