USD/CHF Selloff Stalls to Keep RSI Out of Oversold Zone

US Dollar Outlook: USD/CHF

USD/CHF bounces back from a fresh yearly (0.8035) to keep the Relative Strength Index (RSI) out of oversold territory, but the exchange rate may continue to track the negative slope in the 50-Day SMA (0.8233) as it still holds below the moving average.

USD/CHF Selloff Stalls to Keep RSI Out of Oversold Zone

Keep in mind, USD/CHF pulled back ahead of the moving average to hold below the monthly high (0.8250), with the exchange rate clearing the April low (0.8040) earlier this week even though the Swiss National Bank (SNB) remains ‘willing to be active in the foreign exchange market as necessary’ after cutting its benchmark interest rate to zero.

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As a result, the weakness in USD/CHF may persist as the Federal Reserve appears to be on track to implement lower interest rates later this year, but the central bank appears to be in no rush to further unwind its restrictive policy as Chairman Jerome Powell tells US lawmakers that ‘we are well positioned to wait to learn more about the likely course of the economy before considering any adjustments to our policy stance.’

With that said, USD/CHF may consolidate over the remainder of the month as the Relative Strength Index (RSI) holds above oversold territory, but a move below 30 in the oscillator is likely to be accompanied by a further decline in the exchange rate like the price action from earlier this year.

USD/CHF Price Chart – Daily

Chart Prepared by David Song, Senior Strategist; USD/CHF Price on TradingView

USD/CHF may stage a larger rebound following the failed attempt to push/close below the 0.8030 (38.2% Fibonacci extension) to 0.8080 (23.6% Fibonacci retracement) zone, and a move above 0.8200 (23.6% Fibonacci extension) may lead to a test of the monthly high (0.8250).
Next area of interest comes in around 0.8360 (100% Fibonacci extension), but USD/CHF extend the decline from the start of the week should it continue to track the negatives slope in the 50-Day SMA (0.8322).
A move/close below the 0.8030 (38.2% Fibonacci extension) to 0.8080 (23.6% Fibonacci retracement) zone may push USD/CHF toward 0.7900 (50% Fibonacci extension), with
Next area of interest comes in around 0.7760 (61.8% Fibonacci extension) to 0.7810 (161.8% Fibonacci extension).

Additional Market Outlooks

AUD/USD Recovery Materializes amid Failed Attempt to Test May Low

US Dollar Forecast: USD/JPY Reverses Ahead of May High

EUR/USD Faces Fed Chair Powell Testimony

GBP/USD Rebound Emerges amid Failure to Close Below 50-Day SMA

--- Written by David Song, Senior Strategist

Follow on Twitter at @DavidJSong

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