- The dollar remains firm in the market in the run-up to the Fed meeting.
- Uptrend remains strong in USD/CHF testing 0.9800.
- Technical indicators on daily chart and more remains overbought.
USD/CHF rose as high as 0.9792 on Tuesday, marking a new high since April 2020 and then pulled back erasing intraday gains and fell as low as 0.9765. It is trading around 0.9770, on a day where the dollar is holding firm and range-bound trading is predominant in major currency pairs.
The dollar remains firm in the market. DXY trades flat near years high above 103.50. The decline in Treasury bond yields is being moderate, which does not favor a correction of the greenback.
In hours the meeting begins Federal Reserve, which will announce the decision on Wednesday. A rise in the reference rate of 50 basis points is expected and the focus will also be on the future outlook and on what Chairman Jerome Powell says. In addition, the beginning of the quantitative adjustment is expected, that is, a reduction in the central bank’s balance sheet.
As far as data is concerned, on Tuesday in the US the job notices report will be published, and the factory orders report for March. The Wednesday before the Fed will be the report of job ADP Private Sector and Friday will be Non-Farm Payrolls. For now, the data is overshadowed by the Fed, but has the potential to trigger volatility.
In SwissApril inflation data will be published on Thursday (the annual rate is currently 2.4%) and on Friday the unemployment rate is estimated to have remained at 2.2% in April.
bullish, overbought
The USD/CHF remains in an uptrend and still looking for a new equilibrium level. The technical indicators on the daily chart are at overbought levels, and if there is a correction it could be significant. This might not happen before the Fed meeting. Then it will depend on the message from the central bank and whether the “buy on the rumour, sell on the news” thing happens.
For now, the 0.9800/05 zone is the immediate resistance, where the April 2020 highs are. Above it remains 0.9840. In the opposite direction, 0.9755/60 is the next support, followed by 0.9700.
Technical levels
Source: Fx Street
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