Current trend

The USD/CHF pair is adjusting to a long-term downtrend and has been growing for the fourth consecutive session: the US dollar is receiving support against the background of the publication of positive data on gross domestic product (GDP) for the second quarter.

Recall that the US economy grew by 3.0% with preliminary estimates of 2.8%, increasing the likelihood of the US Federal Reserve cutting rates in September by 25 basis points instead of 50 basis points, which some experts had previously expected. Nevertheless, the regulator is likely to clarify the final question about the volume of monetary policy easing only after the Friday publication of August unemployment statistics: if the uptrend continues, officials may reduce the cost of borrowing more aggressively, but if the forecast of a decrease to 4.2% is implemented, the interest rate correction will be moderate.

On the other hand, the Swiss currency is under pressure against the background of the publication of August inflation data: MoM, the consumer price index was 0.0% instead of the expected increase to 0.1, and YoY – 1.1% instead of 1.2%. Thus, price pressure in the Swiss economy continues to decline, and inflation remains in the target range of 0.0–2.0%, which increases the likelihood of further interest rate cuts by the Swiss National Bank (SNB). In addition, last week, the head of the regulator, Thomas Jordan, said that a strong franc was putting pressure on the manufacturing sector and did not even rule out currency interventions to stabilize the exchange rate, which also contributed to investors abandoning the Swiss currency in favor of the US dollar.

Support and resistance

Technically, the price is close to the central line of Bollinger Bands in the area of 0.8565, with a breakout of which the current trend may change and continue growth towards the targets of 0.8667 (Murrey level [3/8]) and 0.8789 (Murrey level [4/8]). The key for the "bears" is the 0.8422 mark (Murrey level [1/8], the area of August lows), the breakdown of which will ensure the development of downward dynamics to the levels of 0.8300 (Murrey level [0/8]) and 0.8178 (Murrey level [1/8]).

Technical indicators do not give a clear signal: Bollinger Bands unfold horizontally after a decline, MACD decreases in the negative zone, and Stochastic is directed upwards, but approaches the overbought zone, which soon may lead to a downward reversal.

Resistance levels: 0.8565, 0.8667, 0.8789.

Support levels: 0.8422, 0.8300, 0.8178.

Trading tips

Short positions should be opened below 0.8422 with targets of 0.8300, 0.8178 and a stop-loss around 0.8510. Implementation period: 5–7 days.

Long positions can be opened above the level of 0.8565 with targets of 0.8789, 0.8911 and a stop-loss around 0.8475.