USD/CHF Price Analysis: Bulls fail to conquer the 200-day SMA, further downside on the horizon

• The USD/CHF reversed its course after jumping to a daily high of 0.9032 and then settling slightly above 0.9000.
• The USD is struggling to gather momentum on a positive market mood.
• The US reported strong economic activity figures from September.
• Rising US Treasury yields may limit the downside for the pair.

In Tuesday’s session, the USD/CHF saw volatility, and after initially rising to a high above the 200-day Simple Moving Average (SMA) of 0.9032, it retreated towards 0.9000, still holding some daily gains. The  market movers for the pair included US economic activity figures from September, while the Swiss economic calendar had nothing relevant to offer.

The US Census Bureau reported that Retail Sales came in at 0.7% MoM in September, higher than the 0.3% expected but decelerated from 0.8%. Furthermore, Industrial Production rose by 0.3% MoM in the same month versus the 0% expected, and both data points suggest that the US economy is resilient despite the Federal Reserve's (Fed) contractive monetary policy. 

As a reaction, US yields continued rising, and the 2, 5, and 10-year rates rose to 5.22%, 4.88%, and 4.85%, respectively, with all three seeing more than 1.50% increases and approaching multi-week highs. In line with that, investors may be gearing up for another hike by the Federal Reserve as the combination of strong economic activity and inflation accelerating in September may justify one more 25 basis point (bps) increase in 2023. According to the CME FedWatch tool, the odds of a 25 bps hike in the December meeting rose to nearly 42%, while a pause in September is nearly to be priced in. For the rest of the week, the Federal Reserve’s Beige Book will provide further clues on Wednesday's US economic outlook and the weekly Jobless Claims report on Thursday.

USD/CHF Levels to watch 

Observing the daily chart, the outlook is starting to tilt in favour of the bears, but they still have some work to do. The Relative Strength Index (RSI) has a negative slope below its midline, while the Moving Average Convergence (MACD) histogram presents bigger red bars. Additionally, the pair is below the 20 and 200-day Simple Moving Averages (SMAs) but above the 100-day SMA, indicating that the bulls still have some gas left in the tank in the broader picture.

Support levels: 0.8980, 0.8950, 0.8930.

Resistance levels: 0.9018 (200-day SMA), 0.9040, 0.9070.

USD/CHF Daily Chart