USD/CHF closes back in on support levels around 0.9640-50
And the swing region there sits just above the 50.0 retracement level @ 0.9628. So far, that is helping to limit declines in the pair since late August. Last Friday’s lows touched 0.9642 before price moved higher again.
But at the same time, upside in the pair remains limited as well as the 200-day MA (blue line) continues to act as a key resistance level for sellers to lean on.
The start to Asian trading today has been rather subdued, offering little direction for the pair but the swissie is a little stronger against the greenback following weaker sentiment overnight for the dollar as CPI figures disappointed.
That won’t be enough to put off a rate hike in December just yet but the market will surely scrutinise US economic data more so than before for more clues surely. That puts pressure on data releases moving forward to help boost dollar sentiment.
Technically, near-term momentum resides with sellers still as price trades below the key hourly moving averages. But price needs to move below 0.9642 before a further break to the downside can be seen. Of more importance, a daily close below 0.9628 is needed to extend the downside leg.
Apart from the dollar side of the equation, the swissie remains supported as Italian budget worries continue to intensify although there’s been a bout of volatility there resulting in flows in and out of European assets – which is seeing the swissie move up and down as well. Keep an eye on that for any clues on swissie sentiment.
Although the dollar is a little weak, the idea of trading for a bounce here isn’t too bad. The risk to the trade is the support levels mentioned above so they can be well defined and limited. As for the upside, the 200-day MA is what is capping any bounces and that sits well away from current levels. Though that’s speaking from a purely technical point of view.
To each his/her own and always trade only what you’re comfortable with.