USD/CHF retreats from resistance ahead of FOMC
James Chen, CMT April 25, 2016 8:30 PM
<p>USD/CHF has tentatively turned back to the downside on Monday ahead of this week’s potentially pivotal Federal Reserve meeting, when guidance on the trajectory of interest rates in the US is expected to be provided by Wednesday’s FOMC statement.</p>
USD/CHF has tentatively turned back to the downside on Monday ahead of this week’s potentially pivotal Federal Reserve meeting, when guidance on the trajectory of interest rates in the US is expected to be provided by Wednesday’s FOMC statement.
Monday’s dollar retreat occurs at a critical level for USD/CHF, tentatively turning the currency pair down right around the key 0.9785 resistance area, which is also around the 50% retracement level of the last major bearish run from March’s high to April’s low. This price level has served as a major support and resistance area since late 2015.
Prior to this retreat from resistance, USD/CHF has spent the past two weeks in a general ascent from early April’s lows around 0.9500 support, as the dollar has been in a moderate rebound since then.
From a slightly longer-term technical perspective, USD/CHF has been in a general decline since December, printing consistently lower highs and lower lows as the dollar has suffered from an increasingly dovish Fed after its most recent rate hike in December.
If USD/CHF continues to trade below the noted 0.9785 resistance area in the run-up to the Fed meeting, any further dovishness that is likely to emanate from the FOMC statement could lead to continued dollar weakness and a return back down to the 0.9500 support area to resume the medium-term downtrend. In the event of a break below 0.9500, the next major downside target is at the 0.9250 support area.
In the opposite event of a more hawkish Fed outcome, any breakout above resistance could lead to an extended rebound and downtrend reversal next targeting parity (1.0000), which was last hit in early March.
Disclaimer: The information on this web site is not targeted at the general public of any particular country. It is not intended for distribution to residents in any country where such distribution or use would contravene any local law or regulatory requirement. The information and opinions in this report are for general information use only and are not intended as an offer or solicitation with respect to the purchase or sale of any currency or CFD contract. All opinions and information contained in this report are subject to change without notice. This report has been prepared without regard to the specific investment objectives, financial situation and needs of any particular recipient. Any references to historical price movements or levels is informational based on our analysis and we do not represent or warranty that any such movements or levels are likely to reoccur in the future. While the information contained herein was obtained from sources believed to be reliable, author does not guarantee its accuracy or completeness, nor does author assume any liability for any direct, indirect or consequential loss that may result from the reliance by any person upon any such information or opinions.
Futures, Options on Futures, Foreign Exchange and other leveraged products involves significant risk of loss and is not suitable for all investors. Losses can exceed your deposits. Increasing leverage increases risk. Spot Gold and Silver contracts are not subject to regulation under the U.S. Commodity Exchange Act. Contracts for Difference (CFDs) are not available for US residents. Before deciding to trade forex and commodity futures, you should carefully consider your financial objectives, level of experience and risk appetite. Any opinions, news, research, analyses, prices or other information contained herein is intended as general information about the subject matter covered and is provided with the understanding that we do not provide any investment, legal, or tax advice. You should consult with appropriate counsel or other advisors on all investment, legal, or tax matters. References to Forex.com or GAIN Capital refer to GAIN Capital Holdings Inc. and its subsidiaries. Please read Characteristics and Risks of Standardized Options.