USDCHF failed in its last couple of attempts to break below support around the .9700 major psychological mark to create a double bottom pattern. Price has a bit of room to go before reaching the neckline around the .9950 minor psychological level.
A break above this resistance could spur a climb that’s the same height as the chart formation. However, price is hitting a roadblock at the 200 SMA dynamic inflection point currently. On the subject of moving averages, the 100 SMA is below the longer-term 200 SMA to indicate that the path of least resistance is to the downside. In other words, the selloff is more likely to gain traction than to reverse.
RSI is heading up to show that bullish pressure is still in play and the oscillator might reach the overbought zone soon. Stochastic is also heading up but nearing the overbought region. Turning lower could draw sellers back in and lead to a test of the lows at the .9650 minor psychological level.
The dollar got a boost even after the FOMC minutes revealed that policymakers actually debated a larger interest rate cut in their latest meeting. This signals a bleaker outlook than many expected, setting the stage for even more interest rate cuts until next year.
Traders might also be adjusting their positions ahead of the Jackson Hole Symposium this weekend as this would likely shed more light on what the central bank might do next. In particular, traders will be keeping close tabs on Fed Chairperson Powell’s speech as this might contain monetary policy clues.
There are no major reports due from the Swiss economy, but the franc has been under weak footing as traders anticipate SNB intervention in case the ECB steps up its easing game. The upcoming release of euro zone PMIs could shape expectations for monetary policy, and analysts are expecting declines.