USD/CHF nears overbought conditions ahead of SNB and Fed meetings

• USD/CHF continued to advance and approached 0.8988.
• The SNB meets on Thursday and markets expect a 25 basis point rise.
• In the US, mixed housing data was reported in August. US yields recover.

On Tuesday, the USD/CHF It continued to gain ground and rose to 0.8980, which has already accumulated a monthly increase of 1.60%. On the one hand, the Swiss National Bank is expected to make its last rate hike of this tightening cycle to 2%, while the Federal Reserve (Fed) cycle is not yet over.

Along these lines, the Federal Open Market Committee (Fed) met twice on Tuesday and ended on Wednesday with the announcement of the monetary policy decision. The Fed is expected to keep rates in the 5.25-5.50% range, but will hint at the need for further increases. Economic activity in the US has proven resilient, and as the Fed expects the economy to cool, a final hike may be appropriate. In this sense, as investors discount that the Swiss National Bank (SNB) will end its latest increase on Thursday, monetary policy divergences could continue to drive the pair higher.

Regarding the data, in the US it was reported that construction permits accelerated to 1,543 million in August, exceeding the expected and previous figures, while housing construction starts slowed slightly to 1,283 million .

USD/CHF Levels to watch

Daily chart analysis indicates a bullish trend for USD/CHF in the short term. The Relative Strength Index (RSI) is above its midline in positive territory, with a positive slope close to 70, aligning with the positive signal of the moving average divergence (MACD), which shows green bars, reinforcing the strong bullish sentiment. Furthermore, a bullish crossover was recorded between the 20-day and 100-day simple moving averages (SMA) at the 0.8885 area, which could boost the pair further.

Support levels: 0.8950, 0.8900, 0.8885.

Resistance levels: 0.8985, 0.9000, 0.9038 (200-day SMA).

USD/CHF Daily Chart