USD/CHF looks to close the day flat following mixed reactions to FOMC

USD/CHF encounters resistance near 0.99.
DXY looks to close the day in red despite hawkish FOMC.

Eren Sengezer FXStreet

The USD/CHF pair gained more than 50 pips to 0.99 area in a matter of minutes after the FOMC published its monetary policy statement and the updated projections. However, the pair gradually retraced its upside during the press conference and was last seen trading around 0.9860, where it was down 0.1% on the day.

In line with the market consensus, the FOMC decided to hike its Fed funds rate by 25 basis points to 1.75%-2%. The revised dot diagram showed that the Committee members were expecting a total of four rate hikes in 2018. The knee-jerk reaction to the statement lifted the DXY to a fresh weekly high of 94.04.

However, during the ensuing press conference, the DXY erased its gains and returned to mid-93s. Although Jerome Powell didn't adopt a dovish tone per se, a profit-taking action ahead of tomorrow's ECB event is likely to be the primary reason behind the fact that the USD couldn't preserve its bullish momentum.

Technical levels to watch

0.9800 (psychological level/100-WMA) remains as a stiff support ahead of 0.9770 (Apr. 24 low) and 0.9710 (Apr. 29 low). On the upside, resistances could be seen at 0.9895/0.9910 (Jun. 1 high), 1.0000 (psychological level/parity) and 1.0055 (May 10 high).

Author

Eren Sengezer

FXStreet

As an economist at heart, Eren Sengezer specializes in the assessment of the short-term and long-term impacts of macroeconomic data, central bank policies and political developments on financial assets.

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