Technical Bias: Bullish
Key Takeaways
US dollar eyes the US Gross Domestic Product report for more gains in the near future.
USDCHF pair stopped right around an important resistance area, which might result in a short-term correction.
USDCHF support seen at 0.9400 and resistance ahead at 9520.
The US dollar cannot continue to rise forever, especially when all major technical indicators are signaling overbought readings. However, we need some solid signs of a top before calling for a retracement.
US GDP
Today, the US Gross Domestic Product report will be released by the US Bureau of Economic Analysis. The forecast is slated for an increase of 4.6% in the US GDP, compared to the last estimate of a 2.1% decline. Moreover, the personal consumption expenditure is expected to rise by 2.3%. No doubt, the market is expecting good numbers, but we need to be very careful as any major disappointment might trigger a correction in the US dollar considering the fact that it is already at elevated levels.
Technical Analysis
There is a three trend line structure formed on the 4 hour chart of the USDCHF pair. Yesterday, the pair stalled right around the topmost trend line during the NY session at 0.9512. As this analysis is written, the pair is testing the middle trend line which is just above the 38.2% Fibonacci retracement level of the last leg higher from the 0.9353 low to 0.9514 high. So, if it settles below the trend line and support area, then there is a high probability that the pair might head towards the channel support area.
Alternatively, if it corrects higher from the current trend line, then it might head back towards the channel resistance trend line, which is roughly around the 0.9520 level. The chance of a correction is growing, but we need the pair to close below the channel support area for a move lower.
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