Bottom line: USDCHF medium term outlook has turned bullish against 0.9000 levels. The currency has managed to produce an impressive rally towards 0.9160 before pulling back. Bulls might be inclined to resume higher towards 0.9500 and beyond in the coming weeks.

 Fundamental Outlook:

USDCHF had rallied towards 0.9160 levels post FOMC on August 19. The exchange rate is trading lower towards 0.9070/80 for now, and might further gain as the US Dollar is expected to remain strong over the next several weeks. The exchange rate might be taking cues from the Jackson Hols Symposium to be held over the next week.

Global equity markets were mixed yesterday with most Asian and European Indices closing in the red. Hang Seng was down over -1.5%, Nikkei around -1/0%, FTSE down over -1.10% and DAX down over -0.5%. The SPX500 managed to erase its previous losses and futures are trading around 3390 as we prepare to publish. Investors might keep a close watch over the next few sessions as risk aversion could continue.

Technical Analysis:

USDCHF had dropped to 0.9010 lows early this week before finding support again. Bulls have managed to push through 0.9160 levels and are taking a break for now. They should be looking poised to resume from 0.9060/70 mark and push through 0.9500 in the near term.

USDCHF should hold above 0.9010 lows to keep the above bullish structure intact. Further, a break above 0.9200/50 would confirm that a meaningful low is in place and bulls are expected to remain in control thereafter. Looking higher towards major resistance around 0.9900 levels.

USDCHF has completed a complex corrective drop since 1.0237 highs. Ideally, the corrective drop should be retraced at least towards the 0.9900 handle if not higher. Further the earlier drop looks complete as fibonacci 1.618 extension has been met around 0.9150 levels earlier.

Most traders might be preparing to initiate fresh long positions around current levels (0.9075), with protective stops below 0.9000 handle and projected targets towards 0.9500 and higher respectively. Only a drop below 0.9000 consistently, would change the above bullish structure.

Prepared by

Harsh Japee, Technical Analyst.

USDCHF Chart

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