USDCHF has been trending higher on its 4-hour time frame, moving inside a rising channel and currently testing resistance. If this keeps gains in check, price could make a correction to the bottom of the channel or the Fibonacci retracement levels based on the latest swing high and low.
In particular, the 61.8% Fibonacci retracement level lines up with the channel support around the .9400 major psychological mark. This is also close to the 200 SMA, which has held as dynamic support in the past. The 100 SMA is above this long-term moving average so the ongoing uptrend is likely to carry on.
For now, stochastic is pointing down and suggesting that a correction is about to take place. A shallow correction could bounce off the 38.2% Fibonacci retracement level at the middle of the channel since this lines up with a former resistance area around the .9500 major psychological mark.
USDCHF Fundamental Factors
Event risks for this setup include the release of US jobless claims data and its CB leading index in the upcoming New York trading session. Weaker than expected data could spur a larger correction to the bottom of the range while a strong result could trigger a quick bounce back to the channel resistance or perhaps an upside breakout.
As for the franc, there are no reports due from Switzerland today but the SNB is always liable to intervene in the forex market, so the path of least resistance for USDCHF is to the upside.
Keep in mind that a number of US companies have been releasing earnings reports in the past few days and some are still set to release their numbers throughout the week, which means volatile movements in the equity markets. This is spilling over to the US dollar’s forex price action, particularly if the earnings reports come in mostly weaker than expected. Nonetheless, with the Fed on track to hike rates sometime this year, the dollar could still stay supported in the long run.
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