USD/CHF Price Analysis: Recovery firmly to 0.8950 as Fed policy comes into picture

The USD/CHF pair is eyeing a recovery extension above the immediate resistance of 0.8946 in the early Tokyo session. The Swiss franc asset recovered swiftly from the round-level support of 0.8900 as investors are running for the US Dollar Index (DXY) as a safe-haven ahead of the interest rate decision by the Federal Reserve (Fed).

S&P500 futures are showing some losses in early Asia as investors are getting anxious ahead of United States ISM Manufacturing PMI (April) and Fed’s monetary policy, portraying a caution in an overall risk appetite theme. The US Dollar Index (DXY) is approaching the critical resistance of 101.80 amid an improvement in its safe-haven appeal.

The Swiss franc remained in action on Friday after the release of Real Retail Sales (March) data. Annual Real Retail Sales contracted sharply by 1.9% while the street was anticipating an expansion by 1.7%. This would be a relief for the Swiss National Bank (SNB), which is struggling to tame stubborn inflation.

Investors should be aware that the Swiss economy will remain closed on Monday on account of Labor Day.

USD/CHF is preparing for a bullish reversal as it is gathering strength after breaking the downward-sloping trendline plotted around March 08 high at 0.9439 on a two-hour scale. The Swiss Franc asset is confidently shifting above 20-period Exponential Moving Average (EMA) at 0.8936, indicating a bullish shift in the short-term trend.

The major has shown a recovery after forming a Triple Bottom chart pattern which indicates that the downside bias is over as the entire selling has dried.

The Relative Strength Index (RSI) (14) has shifted into the 40.00-60.00 range. A move into the bullish range of 60.00-80.00 will strengthen the US Dollar bulls further.

Should the asset decisively breaks above the psychological resistance at 0.9000, US Dollar bulls will drive the asset towards April 07 low and high at 0.9034 and 0.9082 respectively.

Alternatively, a downside move below April 17 low at 0.8922 will drag the asset toward April 13 low at 0.8860. A slippage below the latter will expose the asset to the round-level support at 0.8800.

USD/CHF two-hour chart