The dollar declined amid Monday’s session after Federal Reserve Governor Brainard supported decision to leave U.S. interest rates unchanged, which sent the USD/CHF pair an intraday volatility with a downside bias.
The pair remained broadly higher on the day, but remained steady in a trading range fueled by swinging prices last week. Meanwhile, range-bound trading could be extended later in the week after the Swiss National Bank issued its policy assessment for the quarter.
Further, interest rates will remain unchanged, while the central bank deposit rate rests at -0.75 percent record low, citing SNB is claiming for a growth and inflation estimates.
Moving Average Pivot Points
The initial resistance on the upside amid Friday’s session was 0.97245 high, which continued 0.9810/0.98192 zone lead by the 200-day moving average and swiveling point from late August and early September.
If the initial support for last week will fall below level 0.9600, it would suggest a bearish trend for the longer term outlook for USD/CHF. It is anticipated that any movement would add the probabilities to undermine the currency and follow the June and August lows as the next downside target.
However, the current trend of the pair suggests a neutral level, as the converging trend lines persist. It appears that this steady move outside of the tightening price pattern should likely set the tone for the next significant move for the currency pair.
Based on the policy statement of the Swiss National Bank, the calendar in the U.S. for this week comprises of heavy data.
Meanwhile, the U.S. import/export is estimated for release on Wednesday, while PPI along with retail sales and capacity utilization/industrial production are on Thursday are all included on the calendar. CPI is then set for release on Friday.
Swiss Franc Lower Ahead of ZEW Data
USD/CHF was higher by 0.51% against the CHF and settled at 0.9764 at the close of trade. Switzerland’s producer and import prices lost about 0.3% on a monthly basis in August, which seemed to be higher compared to the expected 0.2% drop.
In addition, the index has seen 0.1% losses in the last month.
The chart below illustrates the currency pair’s movement amid the soon-to-be-released ZEW expectations, in which the pair opened higher 0.97164 and break out on the upside at resistance 0.97342 in a heavy volume.
The pair is expected to find support at 0.97342, and could find its first resistance at 0.97842. In addition, the pair is anticipated to have a significant move as investors will closely watch on Switzerland’s ZEW expectations index for September set to release in a few hours.
Thus, it is widely anticipated that SNB will regain its footing, despite a significantly overvalued France. However, the Fed could have turned essentially neutral, and if a global recession hindered, the Fed will likely go back to 0% to 0.25% target.
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