FxWirePro- USDCHF Trade Idea
The pair surged sharply on board-based US dollar buying. Overall bias remains bullish as long as support 0.8780 holds. It hit a high of 0.89450 at the time of writing and is currently trading around 0.89337.
The Federal Reserve (Fed) and the Swiss National Bank (SNB) are taking different approaches to their monetary policies due to varying economic conditions. The Fed is being cautious, expecting to cut interest rates only once in 2024 instead of three times, as it is concerned about persistent inflation. This approach is meant to maintain economic stability and keep attracting foreign investment into U.S. assets. On the other hand, the SNB recently cut its key interest rate by 0.50% to 0.75%, which is the largest cut in nearly ten years, since it is responding to falling inflation in Switzerland. This easing policy may lead to further rate cuts in 2025. The differing monetary policies may affect currency markets, possibly strengthening the U.S. dollar while weakening the Swiss franc. These actions could also create challenges for emerging markets and influence global trade dynamics.
Technical Analysis
The pair is currently trading above the 34- and above 55-EMA on the 4-hour chart.
Near-Term Resistance: Current resistance is at 0.89580. A break above this level could lead to targets at 0.9000/0.90480. The break above 0.87500 confirms that the decline from 0.9225 was completed at 0.83750.
Immediate Support: The next support level is at 0.8900. If this level is broken, the pair could drop to 0.8860/0.8835/0.8800/0.8780/0.8750/0.8720/0.8700/0.8660/0.8600/0.8580, 0.8550, 0.8525, 0.8499, 0.8440, 0.8420, 0.8390, 0.8365 (61.8% Fibonacci projection), or even 0.8340.
Indicator Analysis (4-hour chart)
- CCI (50): Bullish
- Average Directional Movement Index: bullish
Overall, the trend remains bullish
Trading Recommendation
Consider buying on dips around 0.8900, with a stop loss set at 0.8860 and aiming for a target price of 0.9000.
