Consolidates near multi-year lows around 0.8800

• USD / CHF remained confined in a range around 0.8800 during the middle of the European session.
• The setup appears tilted in favor of bearish traders and supports the outlook for further weakness.
• Any significant recovery attempt beyond the 0.8860 region could be seen as a selling opportunity.

The pair USD/CHF it balanced between tepid gains / minor losses, around 0.8800 during the European mid-session and consolidated its recent losses to multi-year lows.

The pair’s inability to post a significant recovery suggests that the recent downtrend may still be far from over. Meanwhile, the technical indicators on the daily chart remain deep in bearish territory and add credibility to the negative outlook.

The bearish bias is reinforced by the fact that the USD / CHF pair is trading well below its intraday moving averages: 50, 100 and 200 hourly SMAs. Therefore, a subsequent dip below the overnight lows, around the 0.8785 area, will set the stage for further weakness.

The next relevant downside target is tied to the 2014 lows, around the 0.8700 round mark. The downward trajectory could extend further and make the USD / CHF pair vulnerable to test the next relevant support near the 0.8350-45 region.

On the other hand, any attempt at a recovery move is likely to face resistance near the 0.8830 region. A sustained move beyond could trigger a short covering bounce that would push the USD / CHF pair beyond the 0.8860 supply zone, towards the recovery of the 0.8900 level.

With that said, the positive move could still be seen as an opportunity to initiate new bearish positions and risks fading away fairly quickly amid the prevailing bearish sentiment surrounding the US Dollar.

1 hour chart

Technical levels