USDCHF has formed lower highs connected by a falling trend line that’s been holding since July. Price looks ready for another test of this resistance level, which is right around the dynamic inflection points at the moving averages.

The 100 SMA is below the 200 SMA to indicate that the path of least resistance is to the downside or that the downtrend is more likely to gain traction than to reverse. The gap between the indicators is widening to reflect strengthening selling pressure.

Price is already testing the 50% Fibonacci retracement level around the .8658 mark, and a higher pullback could still reach the 61.8% Fib at .8711 or the trend line resistance closer to the .8800 major psychological mark. If any of these hold, USDCHF could set its sights back on the swing low at .8432 or lower.

Stochastic is already in the overbought region to signal exhaustion among buyers, so turning lower could indicate that the selloff is about to resume. RSI has some room to climb before reaching the overbought area, though, so the correction could keep going until the oscillator turns south as well.

There are no major reports out of the U.S. economy for the rest of the trading day, though, so USDCHF is likely to take cues from overall risk sentiment. Recall that fears of a recession drove risk assets and the dollar earlier in the week, so a return in market panic could bring fresh downside for this currency pair.

Still, the upbeat U.S. initial jobless claims on Thursday seems to have eased investors’ worries, keeping the dollar elevated for the time being. Switzerland’s SECO consumer climate index is up for release, and expectations are for a slight uptick from -37 to -36 for the month of July. A stronger than expected result could bring upside for the Swiss currency.