USD/CHF gathered momentum and broke above the 100-day SMA
05.09.2023, 18:30

USD/CHF gathered momentum and broke above the 100-day SMA

  • After a month of side-ways trading, the USD/CHF jumped above the 100-day SMA.
  • The USD is one of the top performers of the session on the back of risk aversion and hawkish Waller.
  • All eyes are now on Wednesday’s ISM PMIs from the US from August.

The USD/CHF finally saw action after several sessions of sideways trading and jumped above the 100-day Simple Moving Average (SMA) of 0.8880. Despite reporting weak Factory Orders figures from July, the USD traded strongly against most of its rivals.

In line with that, the US DXY index rose to highs since March near 104.80, which a cautious market sentiment could explain as investors await fresh catalysts on a quiet session. Regarding the next Federal Reserve (Fed) decisions, bond yields are trading neutral, with mild gains. At the same time, the World Interest Rates Probabilities (WIRP) tool indicates that market participants are still seeing some probabilities of a 25 basis point (bps) hike for the remainder of the year, which would take rates to 5.75%. 

On Tuesday, Christopher Waller from the Fed stated that until inflation comes down, the Fed will have to keep rates at restrictive levels and that one more hike won’t send the economy into a recession. Those hawkish comments contributed to the USD strength.

On the CHF side, the Swiss Q2 Gross Domestic Product (GDP) was reported on Monday to have remained steady and failed to live up to the expectations of a 0.1% increase expected by the markets, which also explains the upward movements of the pair.

USD/CHF Levels to watch 

Considering the daily chart, USD/CHF presents a neutral to bullish outlook, with the bulls recovering and gaining momentum. The Relative Strength Index (RSI) has a positive slope above its midline, while the Moving Average Convergence (MACD) histogram prints bigger green bars. Additionally, the pair is above the 20 and 100-day Simple Moving Averages (SMAs) but below the 200-day SMA, highlighting the continued dominance of bulls in the broader perspective.

 Support levels: 0.8880 (100-day SMA), 0.8800 (20-day SMA), 0.8750.

 Resistance levels: 0.8900, 0.8930, 0.8950.

 USD/CHF Daily Chart

 

 

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