Published on May 25, 2023

Daily Analysis For USD/CHF 25-05-2023

USD/CHF Analysis Key Points

• The USD/CHF pair is currently making determined attempts to surpass a five-week high at 0.9067, indicating a potential bullish breakout.

• The market's focus remains on the lingering concerns of a potential US default as negotiations over the US borrowing cap face delays. These fears led to a significant drop in the S&P 500 on Wednesday.

• USD/CHF pair has entered a phase of upward price movement, known as a markup phase, following a breakout of the Wyckoff Accumulation pattern. This pattern suggests increased buying pressure and a potential continuation of the bullish trend.

• USD/CHF pair is striving to establish a strong breakthrough above the five-week high, supported by the ongoing markup phase and the prevailing uncertainties surrounding the US borrowing cap.

Today's Scenario: - After experiencing a slight correction from the 0.9060 level during the Asian session, the USD/CHF pair has entered a sideways movement. The Swiss Franc reached a fresh five-week high at 0.9067 and is currently gathering momentum to potentially extend its rally.

In early Tokyo trading, S&P 500 futures have seen significant gains. On Wednesday, US equities suffered heavy losses due to concerns about a potential US default caused by a delay in reaching an agreement on the US borrowing cap.

Meanwhile, the US Dollar Index (DXY) is aiming to break through the crucial resistance level of 104.00, despite increasing speculation that the Federal Reserve (Fed) may pause its tightening of monetary policy.

Overall, the USD/CHF pair has entered a sideways phase after a mild correction, while the Swiss Franc continues to exhibit strength with a fresh five-week high. The market remains cautious due to fears of a US default and the ongoing policy decisions of the Federal Reserve.

Diagram of USD/CHF

Economic Events and Scenario for USD/CHF

Economic Events : -

GMT	Event	Impact	Currency
00:01	(United Kingdom) Car Production YoY	Low	GBP
00:50	(Japan) Foreign Bond Investment	Low	JPY
00:50	(Japan) Stock Investment by Foreigners	Low	JPY
01:00	(Australia) RBA Payments System Board Meeting	Low	AUD
04:35	(Japan) 40-Year JGB Auction	Low	JPY
07:00	(Germany) GDP Growth Rate QoQ	Medium	EUR
07:00	(Germany) GDP Growth Rate YoY	Medium	EUR
07:00	(Germany) GfK Consumer Confidence	High	EUR
07:45	(France) Business Confidence	Medium	EUR
07:45	(France) Business Climate Indicator	Low	EUR
08:00	(Spain) PPI YoY	Low	EUR
09:30	(Slovenia) Tourist Arrivals YoY	Low	EUR
09:30	(Slovenia) Business Confidence	Low	EUR
10:00	(Euro Area) ECB Annual Report 2022	Low	EUR
10:00	(Euro Area) ECB Guindos Speech	High	EUR
10:10	(Italy) BTP Short Term	Low	EUR
11:00	(United Kingdom) CBI Distributive Trades	Medium	GBP
11:00	(Latvia) Unemployment Rate	Low	EUR
12:00	(Canada) CFIB Business Barometer	Low	CAD
13:30	(Canada) Manufacturing Sales MoM	Low	CAD
13:30	(United States) Jobless Claims 4-week Average	High	USD
13:30	(United States) Continuing Jobless Claims	High	USD
13:30	(United States) Initial Jobless Claims	High	USD
13:30	(United States) Chicago Fed National Activity Index	Medium	USD
13:30	(United States) Real Consumer Spending QoQ	Low	USD
13:30	(United States) GDP Sales QoQ	Low	USD
13:30	(United States) Core PCE Prices QoQ	Low	USD
13:30	(United States) PCE Prices QoQ	Low	USD
13:30	(United States) GDP Price Index QoQ	Medium	USD
13:30	(United States) Corporate Profits QoQ	Medium	USD
13:30	(United States) GDP Growth Rate QoQ	Medium	USD
13:30	(Canada) Average Weekly Earnings YoY	Low	CAD
15:00	(United States) Pending Home Sales YoY	Medium	USD
15:00	(United States) Pending Home Sales MoM	Medium	USD
15:30	(United States) EIA Natural Gas Stocks Change	Low	USD
15:30	(United States) Fed Collins Speech	Medium	USD
16:00	(United States) Kansas Fed Composite Index	Low	USD
16:00	(United States) Kansas Fed Manufacturing Index	Low	USD
16:30	(United States) 8-Week Bill Auction	Low	USD
16:30	(United States) 4-Week Bill Auction	Low	USD
17:30	(United Kingdom) BoE Haskel Speech	Low	GBP
18:00	(United States) 7-Year Note Auction	Low	USD
23:00	(New Zealand) ANZ Roy Morgan Consumer Confidence	Low	NZD

Buy Scenario: - The USD/CHF pair has recently entered a markup phase after successfully breaking out of the Wyckoff Accumulation pattern, which formed on a four-hour timeframe. This breakout indicates a shift towards a bullish trend, with expectations of wider upward price movements and increased trading volume as the bulls gain strength during the markup phase. The 20-period Exponential Moving Average (EMA), sloping upward at the 0.9000 level, is providing support for the US Dollar bulls.

Furthermore, the Relative Strength Index (RSI) has confidently moved into the bullish range of 60.00-80.00, further reinforcing the strength of the US Dollar bulls.

Looking ahead, a decisive break above the high set on May 24 at 0.9067 will likely propel the asset towards the next resistance level at the round-level mark of 0.9100, followed by the low from March 28 at 0.9137. Till we do not advise to buy USD/CHF.

Sell Scenario: - On the other hand, if the price moves downward, breaching the low set on May 16 at 0.8929, it could lead to a decline towards the low from April 14 at 0.8867. A further drop below this level would bring the asset closer to the Spring formation around the low from May 04 at 0.8820.

Overall, the USD/CHF pair is currently in a markup phase, supported by the breakout of the Wyckoff Accumulation pattern and the positive indications from the RSI. However, it is important to monitor key resistance and support levels for potential price movements in either direction. Till we do not advise to sell USD/CHF.

Support and Resistance Level: -