USD/CHF extends losses after Chair Powell's words

• USD/CHF declined to 0.8930, seeing nearly 0.64% losses.
• Chair Powell confirmed that the Fed will proceed carefully with eyes on higher bond yields.
• Jobless Claims from the US from the second week of October came in below expectations.

On Thursday, the USD/CHF declined and consolidated below the 200-day Simple Moving Average (SMA), trading around 0.8935. On the US side, the green currency faced selling pressure after Powell’s cautious words and couldn’t capitalise on better than expected Jobless Claims. On the other hand, the Swiss calendar had nothing relevant to offer.

Chair Powell from the Federal Reserve (Fed) revealed that higher Treasury could exacerbate financial tightening, which could have implications in the next decision. That said, he confirmed that the bank would proceed carefully and left the door open for further tightening. 

On the data front, the US Jobless Claims for the week ending on October 13 came in at 198,000, lower than the expected 212,000 and the previous reading of 211,000. Regarding expectations, the 2,5 and 10-year stand uncomfortably high for markets, around 5.18%, 4.97% and 4.96%, respectively. In addition, the CME FedWatch tool indicates that the odds of an additional  25 bps hike in December declined to 30% from 40%. It's worth noticing that the markets are underestimating the Fed. Still, recent data, including an accelerating Consumer Price Index (CPI) and better-than-expected economic activity reports, may push the Federal Open Market Committee to consider one more rate increase.

USD/CHF Levels to watch 

 Analyzing the daily chart, it is apparent that the USD/CHF has a neutral to bearish technical stance, with the bears gradually recovering and asserting themselves. The Relative Strength Index (RSI) has a negative slope in the bearish territory, while the Moving Average Convergence (MACD) histogram lays out increasing red bars. Additionally, the pair is below the 20 and 200-day Simple Moving Averages (SMAs) but above the 100-day SMA, highlighting that despite sellers gaining ground, there is some light for the buyers on the broader scale and that the bears need to increase their efforts to confirm a bearish trend. 

Support levels: 0.8930,0.8915, 0.8900 (100-day SMA). 

Resistance levels: 0.9015 (200-day SMA), 0.9040, 0.9070.

USD/CHF Daily Chart