Key Points: -
· During the early Asian session, the USD/CHF pair is consolidating around the 0.8600 level as market participants await key data releases from the United States.
· The US Dollar (USD) is facing limitations in terms of a significant rebound due to the Federal Reserve's (Fed) expected softening of its hawkish stance. This has resulted in a downward pressure on the USD.
· Later this week, the Swiss Franc (CHF) could be influenced by the release of June's Swiss Trade data, which could potentially act as a key driver for the currency.
Today's Scenario: -
The USD/CHF pair is retreating from its recent high at 0.8630 and is currently hovering around the 0.8600 level during Tuesday's Asian session. This pullback comes after the pair rebounded from a multi-year low following Monday's positive US Empire manufacturing survey.
The Federal Reserve Bank of New York reported that the US Empire manufacturing survey of general business conditions index for July fell from -5.5 to 1.1, surpassing the market consensus of -3.5. This resulted in a modest gain for the US Dollar. However, any significant rebound of the USD from its lowest level since April 2022 is expected to be limited as market participants anticipate that the Federal Reserve (Fed) is approaching the end of its policy tightening cycle.
Given the cautious sentiment in the market ahead of the release of US Retail Sales data, the safe-haven Swiss Franc may benefit. A weaker-than-expected figure from the US Retail Sales report could restrict the upside potential for the US Dollar and act as a headwind for the USD/CHF pair.
Diagram of USD/CHF: -
Economic Events : -
Buy Scenario: -
From a daily chart perspective, the USD/CHF pair continues to show a downtrend, with sellers targeting a potential drop below the year-to-date (YTD) low, potentially leading to a new eight-year low below 0.8300. The Relative Strength Index (RSI) is in bearish territory but has flattened out after reaching an overbought extreme level at 21.42. The three-day Rate of Change (RoC) has also turned neutral, indicating a fading of selling pressure and the possibility of a correction.
In the event of a correction, the USD/CHF pair would face its first resistance at the psychological level of 0.8700, followed by key Fibonacci (Fibo) resistance levels at 38.2% and 50%, located at 0.8730 and 0.8780, respectively. If those levels are surpassed, the next level to watch would be the 0.8800 mark.
Till we do not advise to buy USD/CHF.
Sell Scenario: -
On the downside, the first support for the USD/CHF pair is located at 0.8600, followed by the YTD low at 0.8566 and the psychological level of 0.8500. Till we do not advise to sell USD/CHF.
Support and Resistance Level: -
S1 0.8579 - R1 0.8632
S2 0.8553 - R2 0.8657
S3 0.8527 - R3 0.8684