- USD/CHF dips below 0.9200 as the US Dollar weakens and tumbles below the 20-day EMA.
- USD/CHF Price Analysis: Downward biased and might test the YTD low if it slides below 0.9100.
The USD/CHF stumbles sharply after hitting a two-week new high at 0.9288 and drops beneath 0.9200, to fresh two-day lows around 0.9174, before settling at around the current exchange rate. The USD/CHF changes hands at 0.9173, below its opening price by 0.75%.
USD/CHF Price Analysis: Technical outlook
During Tuesday’s session, the USD/CHF was quickly rejected, slightly above the January 24 daily high of 0.9279, with bears stepping in aggressively, sending the USD/CHF sliding firstly towards the 0.9200 figure, followed by a dip towards the 0.9180 area.
On its way downward, the USD/CHF pair cleared the 20-day Exponential Moving Average (EMA) at 0.9230 and also was seen back below downslope resistance trendlines, drawn since November and January. Therefore, the USD/CHF is downward biased in the short term and might test crucial demand levels.
The USD/CHF first support would be the January 26 high at 0.9158. The break below will expose the 0.9100 psychological level, followed by the YTD low at 0.9085.
As an alternate scenario, the USD/CHF reclaiming the 0.9200 figure, that would open the door for further gains. The next ceiling level would be the 20-day EMA at 0.9230, followed by the January 31 high at 0.9288
USD/CHF Key Technical Levels
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The USD/CHF currency pair is facing significant declines as it gets rejected near the 0.9280s barrier. After a brief move higher, the pair retreated sharply, ending below the 20-day moving average (DMA) as well as dropping below the 0.9200 support level.
For weeks, the pair had been in a relatively volatile trading range between the 0.9250s and 0.9300s, but the break of 0.9280s was bearish and sent the pair in a fast downward spiral. This move was spearheaded by a bearish dollar sentiment, which has been weak throughout the past few sessions. The US Dollar Index (DXY) fell from above the 91.00 level during the European session and kept dropping to near 90.60 just after the US session began.
At the same time, the pair has been under pressure from the Swiss Franc, which is benefitting from safe-haven flows due to the ongoing escalation of the pandemic into parts of Europe. This has pushed the USD/CHF down to the 0.9200 support level, with the 20-DMA acting as another obstacle for the pair’s upside potential.
In the coming sessions, the pair will likely remain stuck in bearish territory as long as the Dollar remains under pressure and the pandemic continues to escalate in Europe. Traders will also need to keep an eye on the US Non-Farm Payrolls release this week and any effect it may have on the US Dollar.
If the US data outperforms market expectations, it could push the USD/CHF pair higher, while weaker-than-expected data could cause further declines. The key resistance level to watch out for is the 0.9280s level. If the pair manages to break above this level, it could open the door to a stronger rebound. Otherwise, further losses may be on the horizon.