The USD/CHF continued to show more strength towards the downside during the previous week trading session. US data has continued to be soft over the past month. However, interest rates have not moved in any significant way, as much of the weakness has been attributed to the bad weather. This view is also shared within the Fed, which has kept the tapering process on track.
Weekly bias in the pair remains strongly on the downside as 21/55 EMA’s, Stochastic, MACD and RSI are all showing signs of bearish trend continuation in the 4hours and Daily time-frames. A break of 0.86982 support will trigger more supply and further decline to 0.8500 round number could be seen in the medium term picture.
However a break of 0.87632 resistance might dampen the bearish long term trend and mild demand to the 0.88146 resistance could be seen (61.8% Fibonacci retracement) from 0.88938 to 0.86982 in the short term. If we get a reversal candle stick pattern around this resistance region, we might have a good selling opportunity with a low risk stop loss.
Key economic indicators to watch out for in the pair in the coming week are the SNB Chairman Jordan Speech, FOMC Statement, FOMC Economic Projections and SNB Monetary Policy Assessment/ Libor Rate. We are not expecting any hike or cuts in the rates but Policy statement should be well monitored.