USD/CHF soars above the 200-day SMA after amid CHF weakness

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• The USD/CHF rose to a two-week high around 0.9035 near the 20-day SMA.
• The CHF is one the worst-performing currencies in the session.
• The US Dollar is trading soft after PCE figures from September.
• Hawkish bets on the Fed remain low ahead of next week’s meeting.

At the end of the week, the USD/CHF rose for a fourth consecutive day, near 0.9035, piercing through the 200-day Simple Moving Average (SMA) but then getting rejected by the 20-day average. The pair’s trajectory seems to be the CHF’s weakness, which trades with losses against the USD, EUR,GBP and JPY in Friday’s sessions and was one of the weakest currencies in the session.

On the other hand, the US Dollar is also trading soft after key inflation data reported earlier in the session. The U.S. Bureau of Economic Analysis revealed that the Core Personal Consumption Expenditures (PCE) Price Index, the Fed’s preferred gauge of inflation, from September, aligned with the consensus. The figure came in at 3.7% YoY, vs. the consensus of 3.7% and decelerated from its previous figure of 3.8%. In addition, The headline PCE Price Index from September came in at 3.4% YoY, vs the expected 3.4% and remained steady regarding its previous figure of 3.4%. 

Other data reported strong Consumer Sentiment figures released by the University of Michigan (UoM), which came in at 68.3 vs 68. The 5-year inflation expectations from the same university figures didn’t reveal any surprise and stood at 3%.

Elsewhere, the US government bond yields are seen neutral, with some rates rising and others declining. The 2-year rate stands at 5.03%, while the 5 and 10-year yields are at 4.79% and 4.87%, respectively. In addition, dovish bets on the Federal Reserve (Fed) are still high, and the CME Fed Watch tool indicates that a pause in the next week’s meeting is practically priced in while the odds of a hike in December retreated to 20%. In that sense, the combination of lower US yields and dovish bets on the Fed may limit the upward trajectory of the pair.

USD/CHF Levels to watch 

Based on the daily chart, the technical outlook for USD/CHF remains neutral to bullish as the bulls recovered a significant amount of ground during the week. The Relative Strength Index (RSI) jumped above the 50 middle point, while the Moving Average Convergence (MACD) exhibited decreasing red bars. 

On the other hand, the pair is below the 20-day Simple Moving Average (SMA), but above the 100 and 200-day SMAs, highlighting the continued dominance of bulls in the broader outlook. However, if the bulls want to continue climbing higher, the 20-day average must be conquered.

Support levels: 0.9000 (200-day SMA), 0.8990, 0.8950. 

Resistance levels: 0.9035 (20-day SMA), 0.9050, 0.9070.

USD/CHF Daily Chart