Bottom line: USDCHF medium to long term outlook remains bullish against 0.8990/0.9000 handle. The currency has managed to take out resistance at 0.9200 mark early this week and is expected to remain in control of bulls, going further.

 Fundamental Outlook:

USDCHF had raised through 0.9200 mark early this week, up over 200 points after hitting lows at 0.8998 earlier. The exchange rate might be set to gain further as US Dollar is set to rise over the next few weeks. Further drop in global equity markets might help the safe haven US Dollar to rise against EURO, GBP, NZD and AUD.

GBPJPY extended its drop and closed at 135.89 levels, down by -1.5% yesterday. The exchange rate has dropped over 700 pips since September 01, 2020. Pound Sterling collapsed across the board yesterday over Brexit developments yet again.

The EU might not refrain from taking legal action, if UK Prime Minister Boris Johnson does not fulfill commitments within the Withdrawal Agreement. As this news crossed wires, GBPUSD reversed sharply from days’ high around 1.3035 and closed lower at 1.2801, down -1.5%.

Technical Analysis:

USDCHF has managed to take out initial resistance at 0.9200 levels this week. The currency is pulling back and is trading around 0.9090/0.9100 levels as we prepare to publish this update. Bulls might be looking poised to resume higher anytime soon as long as 0.9000 holds well.

USDCHF might have carved a potential bottom around 0.9000 levels recently. It had dropped from 0.9900 highs in March 2020 through 0.9000 respectively. Please note that the drop was corrective, and could be a part of a larger correction since 1.0237 levels.

Since printing lows around 0.9000, USDCHF has managed to produce a potential impulse wave taking out initial resistance at 0.9200 handle. An impulse rally is ideally followed by a corrective drop and the currency might have just completed its counter trend drop.

Also note that it is finding support through the fibonacci 0.618 retracement of the recent rally between 0.9000 through 0.9200 respectively. High probability remains for a bullish turn from current levels (0.9090/0.9100) as long as 0.9000 is intact.

Most traders might be inclined to initiate fresh long positions with a protective stop just below 0.9000 mark and potential targets around 0.9450 and higher respectively. Only a consistent drop below 0.9000 handle would change the bullish structure.

Prepared by

Harsh Japee, Technical Analyst.

USDCHF Chart

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