USD/CHF to multi-week highs ahead of Fed decision

• USD/CHF tallies a sixth consecutive day of gains, rising to a high above 0.9100 and then settled at 0.9080.
• The market's mood is cautious ahead of the Fed decision on Wednesday which favours the USD.

On Tuesday, the USD/CHF extended its gains and rose to its highest level since mid-month,  above 0.9100 and now trades above its primary 20,100 and 200-day Simple Moving Averages (SMAs). Daily market movers for the pair included mid-tier housing, consumer confidence and economic activity figures from the US but the Greenback is strengthening ahead of the Federal Reserve (Fed) decision on Wednesday.

On the data front, the House Price Index from August came in at 0.6% MoM, beating the expected 0.5% but declining from its previous reading of 0.8%. Furthermore, the S&P/Case-Shiller Home Price from August came in at 2.2% YoY, higher than the expected 1.6% and accelerated regarding its last reading of 0.2%. In addition, the CB Consumer Confidence Index from October also beat expectations, coming in at 102.6.

On the negative side, the Institute for Supply Management - Chicago reported that the Chicago PMI from October came in lower than expected at 44  vs the expected 45 and declined from its previous reading of 44.1.

Regarding the Fed’s decision, a pause is priced in, and investors will closely look at the policy statement and Chair Powell’s tone in his presser following the decision. In the last meeting, the bank hinted at a “cautious” stance, pointing out that the decisions will be decided carefully, and Powell left the door open for further tightening if the incoming data justifies it. In line with that, investors seem to be refraining from taking on big positions and instead seeking refuge in the USD, which is pushing the pair to the upside and lowering the demand for riskier assets.

USD/CHF Levels to watch 

The technical analysis of USD/CHF highlights a short-term bullish trend. Nevertheless, traders should be mindful of overbought conditions, as these signals may foreshadow an incoming technical correction. The Relative Strength Index (RSI) displays a strong upward momentum in the overbought region, while the Moving Average Convergence (MACD) histogram presents larger green bars. Additionally, the pair is above the 20,100,200-day Simple Moving Average (SMA), indicating that the buyers command the broader perspective.

 Resistance levels: 0.9090, 0.9100, 0.9150.

 Support levels: 0.9050, 0.9015-0.9000 (20 and 200-day SMA convergence), 0.8970.

USD/CHF Daily Chart