USDCHF recently fell through support around the .9000 major psychological mark and appears to be retesting this area of interest that lines up with the 38.2% Fib.

A larger correction could reach the 50% level at .9023 or the 61.8% Fib at .9056, which is closer to a minor psychological resistance and the dynamic inflection points at the moving averages.

Stochastic is indicating overbought conditions and is turning lower to reflect a return in selling pressure. If any of the Fibs hold, USDCHF could resume the slide to the swing low at .8883 or lower.

RSI has some room to climb before reaching the overbought area, so the correction might keep going until the oscillator turns south.

USDCHF will likely take cues from the US CPI release, as well as the FOMC decision later today. The inflation report might print weaker price pressures for May, potentially putting the dollar on weak footing ahead of the Fed statement.

Downgrades to growth and inflation forecasts, as well as projections of three interest rate cuts this year, might be enough to put the dollar back in selloff mode across the board.

However, policymakers had also been stressing the need to keep interest rates “higher for longer” so there are also expectations for the number of rate cuts to be trimmed from three to two. Upgrades to economic estimates might also lead to hawkish policy expectations.

Still, note that the Swiss franc has been enjoying strong rallies recently, buoyed by positive data and remarks from SNB head Jordan who said that there are upside risks to inflation forecasts due to a weaker currency. This could mean that the Swiss central bank isn’t considering easing policy anytime soon, rendering the franc as a strong contender against potential USD weakness.