USD/CHF hovers around 0.9670s

The Swiss franc is registering modest gains of 0.20%, as reflected by the falling of the USD/CHF pair. The pair is retracing from the 50-day moving average and last Friday’s high at 0.9708, down towards the 0.9670s, courtesy of a risk-on impulse as shown by European equities closing in the green territory, while US futures are trading with decent gains. At the time of writing, the USD/CHF is trading at 0.9675.

Technically; the USD/CHF is still headed upwards, despite being below the 50-DMA. The 100 and 200-DMA’s reside well below the spot price, but the double top looming on the daily chart looms, and once USD/CHF sellers achieve a daily close below 0.9544, that would open the door for further losses.

Mixed signals in the daily chart suggest that traders need to adhere to a big deal of caution. It is worth noting that, in line with the US Fed’s aggressive tightening cycle, the Swiss National Bank surprised the markets, hiking 50 bps its interest rates. Nonetheless, the US – Switzerland interest rates differential stills favour theUS dollar, with the US interest rates at 1.75%, while rates in Switzerland remain negative at -0.25%.

The USD/CHF is upward biased. The USD/CHF price action in the last two days shows that buyers are defending the 0.9620s-0.9650s area, with the USD/CHF registering daily closes around that area. Traders should keep in mind that the 78.6% Fibonacci retracement so far has kept sellers aside, and if USD/CHF buyers achieve a daily close above 0.9700, that will expand the consolidation area to the 0.9620-0.9700 region.

If USD/CHF buyers break above 0.9700, that will expose the 61.8% Fibonacci level at 0.9737, followed by the 50% Fibonacci retracement at 0.9797. Once cleared, a move towards 0.9800 is on the cards. On the other hand, the USD/CHF first support would be the 78.6% Fibonacci level at 0.9652. A breach of the latter would expose the June 17 low at 0.96119, followed by the 0.9600 figure.