Bottom line: USDCHF medium term structure remains bullish against 0.9150 lows. The counter trend drop from 0.9900 looks complete at 0.9450 and that bulls are back in control. They should remain poised to push higher towards 1.0027, the next resistance in line.

Fundamental Outlook:

USDCHF exchange rate has been one of the beneficiaries of US Dollar Index gaining traction over the last week, as risk assets reversed. It had managed to raise from 0.9375 through 0.9553 over the last week, as the DXY gained from 95.72 through 97.50 mark. It would be interesting to see how risk assets behave over the coming sessions.

GBPJPY had come under pressure yesterday after the BoE rejected the Negative Interest Rate Policy. The GBPJPY has dropped from 139.50 through 132.40 since June 02, 2020. GBPUSD had also eased off from 1.2550 highs as BoE kept interest rates unchanged at 0.1% and boosted Quantitative Easing (QE) by another GBP100n.

Ethereum has been reeling under pressure along with Bitcoin since June 11, 2020. The crypto has given in from 250 levels since then and print lows around 218.00 before pulling back again. Over the coming sessions, it might come under further pressure as US Dollar set to gain if risk aversion continues.

Technical Analysis:

USDCHF might have carved a meaningful higher low around 0.9375 levels, over the last week. Bulls have managed to produce a Morning Star candlestick pattern and also rallied through 0.9550 levels before pulling back again. The next potential target could be towards 1.0027 mark.

USDCHF had rallied from 0.9150 through 0.9900 levels earlier, taking out interim resistance at 0.9840/50 levels. As expected, it also produced a corrective drop toward 0.9375 levels, which is close to the fibonacci 0.618 retracement of previous rally.

Traders might remain poised to initiate fresh long positions around current levels (0.9500), with protective stops below 0.9300 and projected targets above 1.0027 levels respectively. Only a consistent drop below the 0.9300 mark would change the above bullish scenario.

Prepared by

Harsh Japee, Technical Analyst.

USDCHF Chart

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