USD/CHF Price Analysis: More downside seems imminent

• USD/CHF finds an intermediate support near 0.8600, however, the more downside remains favoured.
• The USD Index remains on backfoot as rate cut expectations outweigh.
• USD/CHF is seen declining further towards 0.8555.

The USD/CHF pair finds an interim support after a steep correction to near the round-level support of 0.8600 in the early European session. The asset is expected to witness more downside as the broader appeal for the US Dollar is bearish as rate cuts by the Federal Reserve (Fed) has come into play.

S&P500 futures have added nominal gains in the late Asian session, portraying a risk-on market mood. The US Dollar Index (DXY) turns sideways after correcting to near 102.10. Deepening focus of the market participants on three rate cut expectations by the Fed in 2024 may keep the USD Index on the backfoot.

Going forward, investors will focus on the Q4 Swiss National Bank (SNB) bulletin, which will be published on Wednesday. The Q4 bulletin will demonstrate monetary policy report and business conditions, which will provide cues about performance of the economy.

USD/CHF has been consistently declining from last two months and is expected to extend its downside journey towards the horizontal support of 0.8555, which is plotted from July 18 low. The 20-day Exponential Moving Average (EMA) at 0.8740 has been acting as a barricade for the US Dollar bulls.

The Relative Strength Index (RSI) (14) has shifted into the bearish range of 20.00-40.00, which indicates that the momentum is in the downside direction.

More downside would appear if the asset drops below December 19 low of 0.8593. This would drag the asset towards July 18 low at 0.8555 and the psychological support of 0.8500.

In an alternate scenario, a recovery move above December 18 high at 0.8711 would drive the asset towards December 06 high around 0.8750. A breach of the latter would open doors for more upside towards August 03 high at 0.8800.

USD/CHF daily chart