Published on Jul 17, 2023

USD/CHF Analysis: Losing Momentum - 17-07-2023.

USD/CHF Analysis

Key Points: -

The USD/CHF pair is losing momentum after a corrective bounce from the lowest level since January 2015.
The US Dollar is struggling to recover as it lacks momentum ahead of the Federal Reserve (Fed) blackout period.
The downbeat market sentiment and weak US economic data are providing support to the Swiss Franc pair, preventing further decline from the multi-month low.
Market participants will closely monitor the release of the US Empire State Manufacturing Index and Retail Sales data to gain clearer directions for the USD/CHF pair.

Today's Scenario: -

The USD/CHF pair has retreated to the 0.8600 level, reversing its recovery from a multi-year low on Friday. Traders are now seeking further clues to support the US Dollar's rebound as they enter the European session on Monday. The lack of significant catalysts has prompted traders to reevaluate the previous day's corrective bounce, particularly given the mixed US data, subdued market sentiment, and the two-week blackout period for Fed policymakers leading up to the July monetary policy meeting.

The US Dollar Index (DXY) is struggling to maintain its two-day recovery from a 15-month low and is currently holding modest gains near 99.95. The rebound in the greenback's gauge was supported by the preliminary reading of the University of Michigan's Consumer Confidence Index and Consumer Inflation Expectations for July. Additionally, hawkish comments from Federal Reserve Governor Christopher Waller have added strength to the corrective bounce.

However, it is important to note that the Fed blackout period and mixed headlines regarding China's participation in the bond market have limited recent movements in USD/CHF, particularly due to Japan's holiday. These factors have also prompted traders to reassess the previous hawkish sentiment surrounding the US Federal Reserve, despite Friday's data and comments from Fed's Waller.

Furthermore, concerns that the Swiss National Bank (SNB) will maintain a hawkish stance, in contrast to the mixed expectations for the Fed's future actions, are also weighing on the USD/CHF price.

In the broader market, S&P500 Futures are showing mild losses, while US 10-year and two-year Treasury bond yields remain sluggish after significant declines in the past week.

Looking ahead, traders of the USD/CHF pair may find interest in second-tier US economic activity and Retail Sales data, as the economic calendar is relatively light.

Diagram of USD/CHF: -

Economic Events : -

Buy Scenario: -

On the Buying side, if the price starts to rise, the 1st resistance level at 0.8761, which acts as a pullback resistance, could pose a substantial challenge to the upward movement of the price. If the price manages to surpass this level, it may encounter the 2nd resistance level at 0.8902, which is also a pullback resistance and could potentially impede further upward price movements. Till we do not advise to buy USD/CHF.

Sell Scenario: -

The USD/CHF pair is currently exhibiting a bearish momentum, suggesting a potential continuation of the downtrend towards the 1st support level.

The 1st support level at 0.8528 is significant as it is reinforced by a 100% Fibonacci Projection. This level may serve as a strong barrier for further downward movement of the price. If the price breaks below this level, it could potentially decline towards the 2nd support level at 0.8312. This level is characterized as a swing low support and may provide additional support to prevent further price drops. Till we do not advise to sell USD/CHF.