USD/CHF Price Analysis: Bulls Exhaust, Correction on the Horizon

• USD/CHF advanced towards 0.8930, recording slight gains.
• Positive risk sentiment influences weekly USD recovery; Even so, the DXY index is about to close a weekly rise of 0.60%.
• US yields edged up slightly, consolidating the weekly rise.

Even though the currency markets are buoyed by the positive market mood and the falling US dollar (USD), the pair USD/CHF continued to gain ground, but the bulls are losing momentum. Still, the pair will close with a weekly rise of 0.86%, its highest since May.

For the rest of the session, the economic calendar will remain calm, and investors await new catalysts to place their bets regarding the next decisions of the Federal Reserve (Fed). Next week, the United States will report the Consumer Price Index (CPI) for August, which is expected to have accelerated. We will also have to keep an eye on retail sales for the same month, which are expected to have slowed.

As for Federal Reserve (Fed) expectations, CME’s FedWatch tool indicates that markets have already priced in a pause at the September 20 meeting, and the odds for the November and December meetings show that the odds for an increase of 25 basis points (bp) is around 40%. In this sense, as long as expectations of Fed tightening remain high, the USD’s losses are limited.

USD/CHF Levels to watch

The daily chart shows a neutral to bullish technical outlook for USD/CHF as signs of buying exhaustion become evident. Sloping flat above its midline, the Relative Strength Index (RSI) suggests that the pair could consolidate gains in the coming sessions, while the Moving Average Convergence Histogram (MACD) exhibits stagnant green bars.

Support Levels: 0.8900, 0.8877 (100-day SMA), 0.8850.

Resistance levels: 0.8950, 0.9000, 0.9030.

USD/CHF Daily Chart