USD/CHF Price Analysis: Slides towards 0.9200 after Fed’s monetary policy decision

After rallying for three consecutive days, the USD/CHF pierced the 61.8% Fibonacci retracement, then retreated towards December 14 lows, trading at 0.9214 during the New York session at the time of writing. The market sentiment is upbeat once the Federal Reserve unveiled its monetary policy decision, in line with investors’ expectations.

The Fed delivered a faster bond taper, decreasing its bond purchases by $30 Billion, double the November monetary policy meeting’s agreed. Also, in the Summary of Economic Projections (SEP) with the dot-plot, Federal Reserve board members expect at least three rate hikes in 2022, as projections estimate that the Federal Funds Rate would end at 0.90%.

The USD/CHF remained trapped in the 0.9225-50 range in the overnight session. However, once American traders got to their desks, the pair broke support at the December 15 pivot low 0.9224, slumping towards 0.9198. 

In the meantime, US Bond yields in the short term of the curve fall between one and seven basis points, led by 2s, 5s, and 10s at 0.6310%, 1.1848%, and 1.42%, each, a headwind for the buck, with its US Dollar Index back under the 96 handle, down 0.53%, at 95.98.

USD/CHF Price Forecast: Technical outlook

After piercing the 61.8% Fibonacci retracement, drawn from the November 24 swing high to the November 30 swing low, the USD/CHF pair fell under the 38.2% Fibonacci retracement, and at press time is trading under the 50-DMA, which lies at 0.9215.

That said, to the upside, the first resistance would be the 50-DMA at the abovementioned level. A break above that level would expose the 38.2% Fibonacci retracement at 0.9239, followed by the 50% Fibonacci retracement at 0.9265.

On the other hand, the first support level would be the 100-DMA at 0.9202. A breach of the latter would expose crucial support levels, as the December 14 low at 0.9188, followed by the 200-DMA at 0.9177.