USDCHF is currently testing a major inflection point on its long-term chart, suggesting the possibility of a bounce or a potential break. Price is nearing the descending trend line on the 4-hour time frame and is also finding resistance at the moving averages.
For now, the short-term simple moving average is below the long-term 200 SMA, confirming that the downtrend could carry on. If these dynamic inflection points continue to hold as resistance, USDCHF could make its way back down to the previous lows at the .9200 major psychological level.
Stochastic is pointing down, suggesting that the path of least resistance is to the downside. RSI is also on the way down, which means that sellers might take control of price action.
USDCHF Fundamental Factors
In terms of fundamentals, however, the odds favor further gains for the US dollar. The US economy just recently printed a strong jobs report for May, confirming that the slowdown was just temporary and that the Fed can afford to hike interest rates by September.
Switzerland hasn’t been printing a lot of economic reports but the franc has been taking its cue from the euro, which is currently being weighed down by the prospect of a Greek debt default. The country has failed to meet its debt payments last week and decided to consolidate their payments for the month, possibly to buy more time to secure a bailout deal and get more funds from its creditors.
The US retail sales release could prove to be a strong catalyst for a move in either direction, as strong reports could trigger an upside break from the trend line and further gains for USDCHF. On the other hand, weak data could suggest that the economy has a long way to go before recovering, putting the dollar back in selloff mode as traders wait for more signs of a pickup.
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