USDCHF has been in a strong climb recently, even breaking past a key resistance area around the .9500 handle. However, the pair seems to have lost steam and may be due for a pullback to the area of interest.
Using the Fib tool on the latest price swing indicates that the 50% Fibonacci level lines up with the broken resistance near .9475 and the 200 SMA. The 100 SMA has just crossed higher, confirming that an uptrend is starting and that a bounce is likely. Stochastic is almost in the oversold area, which also indicates that buying pressure could return soon.
MACD is giving a different signal though, as the indicator is moving on middle ground and is hinting that selling pressure might still pickup. In that case, USDCHF could make a deeper pullback, possibly until the .9450 minor psychological mark. Increased selling momentum could lead to a drop back to the next support zone at the .9400 mark.
Going long at .9475 with a stop below .9400 might be enough to catch the longer-term rally, if it persists. Short-term traders going for a higher return on risk could opt for a tighter stop just below .9450 and aim for the previous highs at the .9550 minor psychological resistance.
Event risks for this USDCHF setup include the pending home sales data from the US economy, which might show a 1.1% rebound. This could lead to a dollar bounce but a weaker than expected reading might lead to a prolonged selloff, as it would follow last week’s lower than expected new home sales report.
There are no major events lined up from Switzerland, as the franc might simply take its cue from euro zone data. For today, the German Ifo business climate report is on tap and a small decline is expected. The latest results of the European bank stress tests might also weigh on European currencies.
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