USD/CHF nears overbought conditions ahead of SNB and Fed meetings

• USD/CHF continued stepping forward and rose near 0.8988.
• SNB meets on Thursday, and markets expect a 25 bps hike.
• The US reported mixed Housing data from August. US Yields recover.

On Tuesday, the USD/CHF continued gaining ground, increasing to 0.8980, and already tallied a 1.60% monthly gain. On the one hand, the Swiss National Bank is expected to deliver its last rate hike from this tightening cycle to 2%, while the Federal Reserve’s (Fed) cycle isn’t done yet.

In line with that, the Federal Open Market Committee (Fed), two-meeting kicked off on Tuesday and ended on Wednesday with the announcement of the monetary policy decision. It is widely expected that the Fed will hold rates steady at the 5.25-5.50% range but will hint at further rate hikes being necessary. Economic activity in the US was seen holding resilient, and as the Fed is expecting the economy to cool down, one last hike may be appropriate. In that sense, as investors discount that the Swiss National Bank (SNB) will end its last hike on Thursday, monetary policy divergences may continue pushing the pair upwards.

On the data front, the US reported that Building Permits accelerated to 1.543M in August, beating the expected and previous figures, while Housing Starts slightly decelerated to 1.283M.
 

USD/CHF Levels to watch 

 The daily chart analysis indicates a bullish outlook for the USD/CHF in the short term. The Relative Strength Index (RSI) is above its midline in positive territory, with a positive slope near 70, aligning with the positive signal from the Moving Average Convergence Divergence (MACD), which displays green bars, reinforcing the strong bullish sentiment. Plus, a bullish crossover between the 20 and 100-day Simple Moving Average (SMA) was recorded at the 0.8885 area, which could further boost the pair.

 Support levels: 0.8950, 0.8900, 0.8885.

 Resistance levels: 0.8985, 0.9000, 0.9038 (200-day SMA)

USD/CHF Daily Chart