The US Dollar (USD) extended downside movement against the Swiss Franc (CHF) on Thursday, dragging the USD/CHF to less than 1.8940 following the US central bank’s decision to trim the monthly asset purchase program by $10 billion to $35 billion. The sentiment remains bullish due to Higher High and Higher low in the recent wave. The huge bearish pin bar which emerged on the daily chart recently is however keeping the pair under selling pressure.
As of this writing the pair is being traded near 1.8943. A hurdle can be seen around 1.8962, the 200 Simple Moving Average (SMA) ahead of 1.9036, the bearish pin bar as shown in the following chart. A break above the 1.9036 resistance area could spur a renewed buying interest, validating a fresh rally above the 1.9100 handle.
On the downside, the pair is likely to find a support around 1.8907, the low of the bearish pin bar and 38.2% fib level ahead of 1.8878, the confluence of 55 Simple Moving Average (SMA) & 100 SMA and then 0.8780, the 76.4% fib level.
Swiss Monetary Policy
The Swiss National Bank (SNB) kept the benchmark interest rate unchanged at 0% today amid fragile growth and deflation in the economy. The decision was widely expected by the analysts, thus the USD/CHF shunned the Switzerland monetary policy announcement and continued to fall.
CB Leading Indicator
The Consumer Board of the US is due to release the leading indicator data today. According to the average forecast of different analysts, the leading indicator increased by 0.6% in May as compared to 0.4% in the month before, better than expected actual outcome will be seen as bullish for USD/CHF and vice versa.
Considering the overall technical and fundamental outlook, selling the pair around the current levels appears to be a good strategy, the stop loss should be placed at the swing high of the bearish pin bar as described above.