USD/CHF recovery may face obstacles above 0.9400

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the main points

  • USD/CHF started an upward correction from a monthly low of 0.9185.
  • Two bearish trend lines are forming with resistance near 0.9430 and 0.9500 on the 4-hour chart.
  • The US Consumer Price Index rose 2.3% in February 2020 (annualized), more than the expected 2.2%.
  • US initial jobless claims may rise in the week ending March 07, 2020 from 216K to 218K.

USD/CHF Technical Analysis

The US dollar started a strong decline from well above 0.9500 against the Swiss franc. USD/CHF fell below the 0.9320 support area and rose below 0.9200 before starting an upward correction.

USD/CHF recovery may face obstacles above 0.9400Looking at the 4-hour chart, the pair traded at a low of 0.9185 and settled below the 100 SMA (red, 4 hours) and the 200 SMA (green, 4 hours).

Recently, the pair managed to recover above the 0.9280 resistance, as well as the 23.6% Fib retracement level of the downward move from 0.9597 swing high to 0.9185.

However, the 0.9400 area appears to be acting as a strong resistance. Besides, the 50% Fib retracement level of the downside move from 0.9597 swing high to 0.9185 near the 0.9390 level.

More importantly, there are two downtrend lines forming with resistance near 0.9430 and 0.9500. Therefore, the pair is likely to face a lot of hurdles above the 0.9400 level in the near term.

On the downside, there is an initial support near the 0.9280 level, where the pair could revisit the 0.9200 and 0.9185 support levels.

Basically, the US Consumer Price Index for February 2020 was released by the US Bureau of Labor Statistics. The market was eyeing a 2.2% rise in CPI compared to the same month last year.

The actual result was higher than the market expectations, as the US CPI rose by 2.3% in February 2020. Looking at the monthly change, there was a 0.1% increase in the CPI, while the market was not looking for any change.

The report added:

Increases in the shelter and food indices were the main reasons for the increase in the all seasonally adjusted index, more than offsetting the decrease in the energy index. The food index rose 0.4 percent during the month, with the food at home index up 0.5 percent, the largest monthly increase since May 2014.

Overall, USD/CHF could correct further, but is likely to struggle above 0.9400. Looking at the EUR/USD, the pair is likely to resume its rise above 1.1380 while GBP/USD fell sharply below 1.2950.

Upcoming economic releases

  • Initial Jobless Claims in the US - Forecast 218K, vs. the previous 216K.
  • European Central Bank rate decision - forecast 0%, vs. 0% previous.

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