USD/CHF finds support at the 100-day SMA, correction in the horizon

On Friday, the USD/CHF sellers seemed to be consolidating their gains, and the pair found support at the 100-day Simple Moving Average (SMA) at 0.8900, rising to a high near 0.8935 and then settling ar 0.8915.

On the USD side, it struggles to gather momentum and trades soft against its rivals. That being said, as all eyes will be set on the Middle East in the conflict between Israel and Palestine, the green currency may find demand on safe-haven flows. For the next week, the highlight will be the S&P Manufacturing PMI from the US from October, where investors will get a clearer outlook from the US economy. This week, Industrial Production and Retail Sales from September came in higher than expected, and the Federal Reserve’s (Fed) Beige book report described the economy as “stable”.

In addition, Chair Powell highlighted on Thursday that higher bond yields, contributing to tighter financial conditions, will be considered for the next decisions. However, he still opened the door for further tightening, and the bank will proceed “carefully”.

USD/CHF Levels to watch 

Upon evaluating the daily chart, a neutral to bearish outlook is seen, with the balance starting to lean in favour of the bears. However, a healthy technical correction shouldn’t be ruled out by traders.

The Relative Strength Index (RSI) maintains a negative slope in the bearish territory, while the Moving Average Convergence (MACD) histogram presents increasing red bars. Those indicators stand near oversold territory, favouring the case of an upward correction in the next sessions. Additionally, the pair is above the 20-day Simple Moving Average (SMA), below the 200-day SMA, but above the 100-day SMA, suggesting that the bears still have some work to do to confirm a bearish bias.

Support levels: 0.8900 (100-day SMA), 0.8870, 0.8850. 

Resistance levels: 0.890,0.9015 (200-day SMA), 0.9040.

USD/CHF Daily Chart