Will MAs Keep USD/CHF Bearish As It Retraces Higher?

USD/CHF has climbed around 130 pips since Friday as the USD regains strength but moving averages are waiting above to provide resistance

Skerdian Meta•Monday, April 17, 2023•2 min read

USD/CHF has been bearish since October, and after a pause early this year, it resumed the ecline again in March, while picking up pace last week, as the USD decline resumed. Movinig averages were acting as resistance on the H4 chart djuring the decline, although we saw a reversal on Friday after hawkish comments from FED’s Waller, better UoM consumer sentiment and higher ionflation expectations.

We saw a retreat early today, but this pair has started to rise again after the 20 SMA (gray) held as support on the H4 chart. Now EUR/CHF is heading towards the round-level resistance at 0.9000. The price action on this pair is following that of the US Dollar Index (DXY), which has regained strength after a slight decline. The FED is looking confident again in continuing to raise interest rates, despite the risk of a recession in the US economy, which is improving the sentiment for the USD.

Although, there are some early indications that Swiss economic growth and employment prospects may be slowing down. However, the unemployment rate remains at a 20-year low of 1.9%, which suggests there is still room for additional tightening of monetary policy.

CIBC expects that the Swiss National Bank (SNB) will tighten policy by another 50 bps in the future. As a result, they predict that the USD/CHF exchange rate will continue to decline, although that is not so straightforward now. They anticipate that USD/CHF will reach CHF0.8950, which is a level not seen since June 2021.

Although, right now this pair is feeling bullish as the USD regains momentum, so we are followingthe price action and looking how buyers will behave at the 50 SMA (yellow). The stochastic indicator is overbought, which is a sign that the retrace higher might be over and a reversal down might follow next, but we will see.

USD/CHF Live Chart

USD/CHF

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Skerdian Meta

Lead Analyst

Skerdian Meta Lead Analyst. Skerdian is a professional Forex trader and a market analyst. He has been actively engaged in market analysis for the past 11 years. Before becoming our head analyst, Skerdian served as a trader and market analyst in Saxo Bank's local branch, Aksioner. Skerdian specialized in experimenting with developing models and hands-on trading. Skerdian has a masters degree in finance and investment.