- The USD/CHF reversed its course after jumping to a daily high of 0.9032 and then settling slightly above 0.9000.
- The USD is struggling to gather momentum on a positive market mood.
- The US reported strong economic activity figures from September.
- Rising US Treasury yields may limit the downside for the pair.
In Tuesday’s session, the USD/CHF saw volatility, and after initially rising to a high above the 200-day Simple Moving Average (SMA) of 0.9032, it retreated towards 0.9000, still holding some daily gains. The market movers for the pair included US economic activity figures from September, while the Swiss economic calendar had nothing relevant to offer.
The US Census Bureau reported that Retail Sales came in at 0.7% MoM in September, higher than the 0.3% expected but decelerated from 0.8%. Furthermore, Industrial Production rose by 0.3% MoM in the same month versus the 0% expected, and both data points suggest that the US economy is resilient despite the Federal Reserve's (Fed) contractive monetary policy.
As a reaction, US yields continued rising, and the 2, 5, and 10-year rates rose to 5.22%, 4.88%, and 4.85%, respectively, with all three seeing more than 1.50% increases and approaching multi-week highs. In line with that, investors may be gearing up for another hike by the Federal Reserve as the combination of strong economic activity and inflation accelerating in September may justify one more 25 basis point (bps) increase in 2023. According to the CME FedWatch tool, the odds of a 25 bps hike in the December meeting rose to nearly 42%, while a pause in September is nearly to be priced in. For the rest of the week, the Federal Reserve’s Beige Book will provide further clues on Wednesday's US economic outlook and the weekly Jobless Claims report on Thursday.
USD/CHF Levels to watch
Observing the daily chart, the outlook is starting to tilt in favour of the bears, but they still have some work to do. The Relative Strength Index (RSI) has a negative slope below its midline, while the Moving Average Convergence (MACD) histogram presents bigger red bars. Additionally, the pair is below the 20 and 200-day Simple Moving Averages (SMAs) but above the 100-day SMA, indicating that the bulls still have some gas left in the tank in the broader picture.
Support levels: 0.8980, 0.8950, 0.8930.
Resistance levels: 0.9018 (200-day SMA), 0.9040, 0.9070.
USD/CHF Daily Chart
-638331640319594549.png)
Information on these pages contains forward-looking statements that involve risks and uncertainties. Markets and instruments profiled on this page are for informational purposes only and should not in any way come across as a recommendation to buy or sell in these assets. You should do your own thorough research before making any investment decisions. FXStreet does not in any way guarantee that this information is free from mistakes, errors, or material misstatements. It also does not guarantee that this information is of a timely nature. Investing in Open Markets involves a great deal of risk, including the loss of all or a portion of your investment, as well as emotional distress. All risks, losses and costs associated with investing, including total loss of principal, are your responsibility. The views and opinions expressed in this article are those of the authors and do not necessarily reflect the official policy or position of FXStreet nor its advertisers. The author will not be held responsible for information that is found at the end of links posted on this page.
If not otherwise explicitly mentioned in the body of the article, at the time of writing, the author has no position in any stock mentioned in this article and no business relationship with any company mentioned. The author has not received compensation for writing this article, other than from FXStreet.
FXStreet and the author do not provide personalized recommendations. The author makes no representations as to the accuracy, completeness, or suitability of this information. FXStreet and the author will not be liable for any errors, omissions or any losses, injuries or damages arising from this information and its display or use. Errors and omissions excepted.
The author and FXStreet are not registered investment advisors and nothing in this article is intended to be investment advice.
Recommended content
Editors’ Picks
EUR/USD treads water just above 1.0400 post-US data
Another sign of the good health of the US economy came in response to firm flash US Manufacturing and Services PMIs, which in turn reinforced further the already strong performance of the US Dollar, relegating EUR/USD to the 1.0400 neighbourhood on Friday.
GBP/USD remains depressed near 1.2520 on stronger Dollar
Poor results from the UK docket kept the British pound on the back foot on Thursday, hovering around the low-1.2500s in a context of generalized weakness in the risk-linked galaxy vs. another outstanding day in the Greenback.
Gold keeps the bid bias unchanged near $2,700
Persistent safe haven demand continues to prop up the march north in Gold prices so far on Friday, hitting new two-week tops past the key $2,700 mark per troy ounce despite extra strength in the Greenback and mixed US yields.
Geopolitics back on the radar
Rising tensions between Russia and Ukraine caused renewed unease in the markets this week. Putin signed an amendment to Russian nuclear doctrine, which allows Russia to use nuclear weapons for retaliating against strikes carried out with conventional weapons.
Eurozone PMI sounds the alarm about growth once more
The composite PMI dropped from 50 to 48.1, once more stressing growth concerns for the eurozone. Hard data has actually come in better than expected recently – so ahead of the December meeting, the ECB has to figure out whether this is the PMI crying wolf or whether it should take this signal seriously. We think it’s the latter.
Best Forex Brokers with Low Spreads
VERIFIED Low spreads are crucial for reducing trading costs. Explore top Forex brokers offering competitive spreads and high leverage. Compare options for EUR/USD, GBP/USD, USD/JPY, and Gold.