In the European session on Tuesday, the USD/CHF pair has rebounded near the psychological resistance level of 0.9000. This movement comes as the US Dollar (USD) strengthens ahead of Federal Reserve Chair Jerome Powell’s semi-annual Congressional testimony scheduled for 14:00 GMT.
The US Dollar Index (DXY), which measures the USD against six major currencies, has stabilized after hitting a three-week low near 104.85.
Investors are keenly awaiting Powell’s remarks for insights into the Fed‘s potential timeline for interest rate reductions. Market expectations currently lean towards a rate cut starting from the September meeting. Additionally, this week’s focus will be on US inflation data for June, set to be released on Thursday, which could further influence USD movements.
Meanwhile, concerns over Swiss National Bank (SNB) policy easing persist amidst decelerating inflation in Switzerland, which registered at 1.3% for June, slightly below expectations.
Technically, USD/CHF is trading within a Falling Channel pattern on the daily timeframe, where retracements are viewed as selling opportunities. The pair finds support near the 200-day Exponential Moving Average (EMA) around 0.8950, indicating a bullish long-term trend.
The 14-day Relative Strength Index (RSI) reflects investor indecision, oscillating between 40.00 and 60.00.
Looking ahead, a decisive break above the June 3 high at 0.9036 would likely propel USD/CHF towards the May 28 low at 0.9086, followed by the May 30 high at 0.9140.
Conversely, a break below the June 4 low of 0.8900 could expose downside targets such as the March 21 low at 0.8840 and the psychological support level of 0.8800.
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