USD/CHF – Dollar Correcting Lower Towards Support Vs Swiss Franc

USD/CHF – Dollar Correcting Lower Towards Support Vs Swiss Franc

  • – The US Dollar has gained heavily this week against the Swiss Franc to trade towards 1.0350.
  • – During the upside move, the USD/CHF pair broke a major resistance area at 1.0200.
  • – The fed interest rate decision was the highlight for this week in which the central bank raised the rates to 0.75% from 0.5%.

 

Fed Interest Rate Decision and US Manufacturing PMI

This week, the US saw a major release by the Federal Reserve Bank. The interest rate decision was announced by the bank, and the market was looking for a hike from 0.5% to 0.75%.

 

The central bank did raise the rates and the market cheered the result. The US Dollar gained heavily and surged higher against most major currencies, including the Swiss Franc. The USD/CHF pair traded as high as 1.0342 where it found sellers.

 

Later this week, the Manufacturing Purchasing Managers Index (PMI) that captures business conditions in the manufacturing sector was released by the Markit Economics. The market was looking for a minor increase from the last reading of 54.1 to 54.2 in Dec 2016.

 

The result was in line with the forecast, as there was a rise to 54.2. Commenting on the outcome, the Chief Business Economist at IHS Markit, Chris Williamson, stated “US manufacturing is enjoying a strong end to 2016, showing further signs of pulling out of the soft-patch seen earlier in the year and putting the sector on the starting blocks ready for a further upturn as we move into 2017”.

 

USD/CHF Technical Analysis

The US Dollar as mentioned gained pace this week against the Swiss Franc, and broke a monster resistance area at 1.0200 to trade as high as 1.0342. The USD/CHF pair is currently correcting lower, and trading near the 23.6% Fib retracement level of the last wave from the 1.0083 low to 1.0342 high.

 

USD/CHF Technical Analysis Dollar

 

However, it looks like the pair has made a short-term top, and may trade further down in the near term. The 50% Fib retracement level of the last wave from the 1.0083 low to 1.0342 high may be tested at 1.0210.

 

The stated level was a resistance earlier, and may now act as a support if the pair dips from the current levels. Buying dips may be considered as long as the pair is above 1.0200.

 

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