USD/CHF: SNB's Rate Cut Threat Fuels Upside

USDCHF has been consolidating in a narrow range between 0.8330 and 0.82048 for the past 10 days. It hit an intraday high of 0.82714 and is currently trading around 0.82390. Intraday bias appears to be bullish as long as the support 0.8180 holds. 

Swiss National Bank Chairman Martin Schlegel indicated the SNB would be willing to cut interest rates further, perhaps into the negative range, to prevent deflation below its target level, and emphasized that while negative interest rates are unpopular, the SNB would be willing to reinstate them to maintain price stability. As Swiss inflation fell to 0% in April, to spark speculation of a reduction from its current level of 0.25% at the June 19 meeting and possible negative rate re-entry, Schlegel also reaffirmed the SNB's readiness to intervene in the foreign exchange market to counter appreciation of the Swiss franc driving up disinflationary pressures and weighing on Swiss exports

Technical Analysis Points to Further Upside

The pair is trading below the 34-EMA and  55-EMA on the 4-hour chart indicating a minor downtrend. The immediate resistance is at 0.8280 any break above targets 0.8300/0.8350/0.8380/0.8500.

Support Levels and Potential Declines

On the downside, near-term support is around 0.8180, any violation below will drag the pair to 0.8135/0.8090/0.8000.

Bullish  Indicators

CCI (50) - Bearish
Directional movement Index -  Neutral

Trading Strategy Recommendation

It is good to buy on dips around 0.8230 with a stop-loss at 0.8180 for a TP of 0.8500.