The USD/CHF pair is expected to extend its recovery above the immediate resistance of 0.8946 as the US Dollar gains momentum ahead of the interest rate decision by the Federal Reserve (Fed). The Swiss franc, on the other hand, is struggling to stay afloat after Swiss’s annual Real Retail Sales contracted sharply by 1.9%, missing the street’s expectation of an expansion by 1.7%.
Investors are running towards the US Dollar Index (DXY) as a safe-haven asset amid rising anxiety ahead of the United States ISM Manufacturing PMI (April) and Fed’s monetary policy. S&P500 futures are showing some losses in early Asia, portraying caution in the overall risk appetite theme. The US Dollar Index (DXY) is approaching the critical resistance of 101.80 amid an improvement in its safe-haven appeal.
USD/CHF has extended its recovery after breaking the downward-sloping trendline plotted around March 08 high at 0.9439 on a two-hour scale. The Swiss Franc asset is confidently shifting above the 20-period Exponential Moving Average (EMA) at 0.8936, indicating a bullish shift in the short-term trend.
The major has shown a recovery after forming a Triple Bottom chart pattern, indicating that the downside bias is over as the entire selling has dried. The Relative Strength Index (RSI) (14) has shifted into the 40.00-60.00 range. A move into the bullish range of 60.00-80.00 will strengthen the US Dollar bulls further.
Buy or Sell Signal?
It is a BUY signal for the USD/CHF currency pair. As the US Dollar gains momentum ahead of the Fed’s policy decision, investors are running towards the currency as a safe-haven asset, causing a bullish shift in the short-term trend. Additionally, the major has shown a recovery after forming a Triple Bottom chart pattern, indicating the end of the downside bias. The Relative Strength Index (RSI) (14) is also in the bullish range, strengthening the US Dollar bulls further.
Should the asset decisively break above the psychological resistance at 0.9000, US Dollar bulls will drive the asset towards April 07 low and high at 0.9034 and 0.9082, respectively. Alternatively, a downside move below April 17 low at 0.8922 will drag the asset towards April 13 low at 0.8860. A slippage below the latter will expose the asset to the round-level support at 0.8800.
Investors should be aware that the Swiss economy will remain closed on Monday on account of Labor Day. This may cause lower liquidity in the market, which could lead to volatile price movements.