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. 


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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