USDCHF has been trending lower in the past weeks, forming lower highs and lower lows inside a descending channel on its hourly chart. Price just bounced off support and looks ready for a pullback to the nearby resistance levels.

The Fib tool shows that the 38.2% level is already being tested, but a higher pullback could still reach the 50% Fib at .9178 near the moving averages. The 100 SMA is below the 200 SMA to confirm that the path of least resistance is to the downside or that the selloff is more likely to resume than to reverse.

An even larger correction could reach the 61.8% Fib closer to the .9200 major psychological mark or the channel top at .9250.

Stochastic is already indicating overbought conditions, though, so a return in bearish pressure might be in order. RSI has a bit of room to climb before reflecting exhaustion among buyers, so the correction could keep going until overbought levels are reached.

USDCHF slid lower after the FOMC decision before pulling up, but the pair could be due to resume its drop if the NFP report misses expectations. A slowdown in hiring is eyed for January, which might underscore the Fed’s plans to slow down their pace of interest rate hikes.

Analysts are expecting to see an increase of 193K in employment, lower than the earlier 223K gain. Meanwhile, the jobless rate could tick higher from 0.5% to 0.6% while the average hourly earnings figure could show another 0.3% uptick.

An upside surprise could spur a rally for the dollar and a larger correction for USDCHF. If any of the Fibs hold as resistance, the pair could resume the drop to the swing low around .9060 or lower.

A break above the channel top could mark the start of a reversal for the downtrend.