USD/CLP: Bulls take a pause, outlook remains bullish

• The USD/CLP trades neutral at 884.35, with technical indicators sideways.
• The Central Bank of Chile, which begins its relaxation cycle, contributes to the upward trajectory.
• The Federal Reserve (Fed) is expected to take a hawkish pause on Wednesday.

On Tuesday, the bulls USD/CLP They take a breather after driving the pair up more than 3.82% in September and consolidate gains in the 884.35 area.

The monetary policy divergences with the Federal Reserve (Fed) could explain the rise of the pair, since since July, the Chilean Central Bank has already cut rates by 1.75%, and the markets discount 1.50% more flexibility in what remains of 2023. The highlight of the week for the CLP will be the publication of the September 5 minutes on Friday, where investors will have a clearer view of the bank’s stance for the upcoming meetings in October and December.

In the US, rate swap markets have all but priced in that the Federal Reserve (Fed) will keep rates steady at 5.25-5.50% on Wednesday. However, Chairman Powell will try to convince markets that the pause does not mean the end of the adjustment cycle, leaving the door open for another rise. In addition, investors will closely monitor the new macroeconomic forecasts and the revision of the famous dot charts of the members of the Federal Open Market Committee (FOMC) to continue shaping their expectations.

USD/CLP levels to watch

Considering the daily chart, the USD/CLP presents a bullish outlook. Despite having turned flat, the Relative Strength Index (RSI) is comfortably in positive territory, while the Moving Average Convergence Histogram (MACD) prints ascending green bars. On the other hand, the pair is above the 20,100,200-day SMA, suggesting that the bulls are clearly in control of the bigger picture.

Support Levels: 884.00, 882.00, 880.00

Resistance levels: 895.00, 898.00, 900.00.

USD/CLP Daily Chart