USD/CHF pulls away from 5-day lows, recovers above 0.99
|- USD/CHF trades in a 30-pip range on Tuesday.
- The trading action is likely to remain choppy ahead of FOMC.
After recording a modest daily loss on Monday, the USD/CHF pair continued to push lower on Tuesday and broke below the 0.99 handle to touch its lowest level since December 6 at 0.9890 before staging a recovery in the early NA session. As of writing, the pair was trading at 0.9916, virtually unchanged on the day.
The pair's price action since the start of the week seems to be driven by the US Dollar Index's movements. Following a technical slide on Monday, the index encountered a modest selling pressure but remained in a tight range. Amid a lack of fresh fundamental catalysts, the index reversed its course in the European morning and was last seen at 93.90, down only 0.05% on the day. Ahead of tomorrow's crucial FOMC meeting, the index is likely to extend its technical consolidation.
Michael Gregory, Deputy Chief Economist at BMO Capital Markets thinks that a rate hike wouldn't receive much of a reaction from the market. “The market is pegging the odds (at least) at 92%. And, all eyes will be on the statement, Summary of Economic Projections (SEP) and Chair Yellen’s swan-song press conference for clues to Fed policy in 2018,” Gregory further explains.
Technical outlook
The initial support for the pair aligns at 0.9890 (daily low/50-DMA) ahead of 0.9835 (Dec. 5 low) and 0.9775 (100-DMA). On the upside, resistances could be seen at 0.9930 (Monday's high), 1.0000 (psychological level) and 1.0040 (Oct. 27 high).
- USD/CHF: Looking for the market to re-take the area above 1.00 - Commerzbank
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