USD/CHF Price Analysis: Declines firmly as USD Index turns heavily volatile
|- USD/CHF has faced selling pressure above 0.9045 amid sheer volatility in the USD Index.
- The USD Index is a rerating candidate as the street is anticipating one more interest rate hike from the Fed.
- USD/CHF is demonstrating an inventory adjustment phase after delivering a breakout of the Wyckoff Accumulation pattern.
The USD/CHF pair has dropped sharply after multiple attempts of shifting the auction profile above 0.9045 in the Asian session. The Swiss Franc asset has attracted significant offers as the US Dollar Index (DXY) has turned extremely volatile as United States investors are returning after an extended weekend on account of Memorial Day.
S&P500 futures have trimmed some gains in Tokyo, portraying a minor caution ahead of reaction from investors over the US debt-ceiling raise approval. The USD Index has shown a wild gyration in a 25-pip range as investors are anticipated to re-rate the asset amid a rebound in expectations for an interest rate hike by the Federal Reserve (Fed).
Meanwhile, the Swiss Franc will remain in action amid the release of the Swiss Q1 Gross Domestic Product (GDP) data. Quarterly GDP is seen expanding by 0.1% vs. a stagnant performance. On an annual basis, the GDP figure is seen landing at 0.6%, lower than the former release of 0.8%.
USD/CHF is demonstrating an inventory adjustment phase after delivering a breakout of the Wyckoff Accumulation pattern formed on a four-hour scale. Broadly, the Swiss franc asset is expected to display wider bullish ticks and heavy volume as bulls remain solid in the markup phase. Upward-sloping 50-period Exponential Moving Average (EMA) at 0.9024 is providing support to the US Dollar bulls.
A confident break into the bullish range of 60.00-80.00 by the Relative Strength Index (RSI) would strengthen US Dollar bulls further.
Going forward, a decisive break above the immediate resistance plotted on May 25 high at 0.9073 will drive the asset toward the round-level resistance of 0.9100 followed by March 28 low at 0.9137.
In an alternate scenario, a downside move below May 16 low at 0.8929 will drag the asset toward April 14 low at 0.8867. A slippage below April 14 low will further drag the asset toward the Spring formation around May 04 low at 0.8820.
USD/CHF four-hour chart
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