USD/CHF Price Analysis: Looks set to renew two-year low as Fed considers policy-tightening pause

• USD/CHF has faced an intense sell-off as the Fed delivered neutral interest rate guidance.
• The USD Index looks vulnerable above 101.07 as fears of the US debt ceiling issue are accelerating swiftly.
• US Treasury has already conveyed that it will be out of funds by early June.

The USD/CHF pair witnessed massive offers from investors on Wednesday as the Federal Reserve (Fed) delivered neutral guidance after hiking interest rates by 25 basis points (bps) to 5.00-5.25%. The Swiss Franc asset has refreshed its two-year low at 0.8820 and is expected to display more downside as the US Dollar Index (DXY) is failing to show evidence of getting confident support.

The USD Index looks vulnerable above its crucial support of 101.07 as fears of the US debt ceiling issue are accelerating swiftly. The White House is not ready for negotiations over the cost of the President’s spending initiatives. US Treasury has already conveyed that it will be out of funds by early June, which would cost 8.3 million jobs and a 6.1% reduction in economic output reported by the White House Council of Economic Advisors.

Meanwhile, S&P500 futures have recovered their entire losses and has turned positive, portraying a recovery in the risk appetite of investors.

USD/CHF is declining towards the crucial support plotted horizontally from 08 January 2021 low at 0.8758. The supply area for US Dollar bulls is placed in a range of 0.8984-0.9000 range on a weekly scale. The 10-period Exponential Moving Average (EMA) at 0.9041 is consistently acting as a barricade for the US Dollar bulls.

The Relative Strength Index (RSI) (14) is oscillating in the bearish range of 20.00-40.00, conveying that the downside momentum is extremely solid.

A breakdown of the intraday low at 0.8820 will drag the asset toward 01 January 201 low at 0.8794 followed by January 2021 low at 0.8758.

In an alternate scenario, a confident move above the psychological resistance at 0.9000, US Dollar bulls will drive the asset towards April 07 low and high at 0.9034 and 0.9082 respectively.

USD/CHF weekly chart