Bottom line: USDCHF medium to long term outlook continues to remain bullish against 0.9000 levels. Bulls are looking poised to take control back from here and push higher towards 0.9900 levels over the next several weeks. A break above 0.9200 would confirm.
Fundamental Outlook:
USDCHF has reversed lower from 0.9200 highs on August 12, 2020. The exchange rate might gain further as the US Dollar might be beneficiary over the next few trading sessions. The US Dollar would be taking its cues from the ongoing negotiations for new fiscal stimulus over unemployment benefits, which expired on July 31, 2020.
Major geopolitical event is due over the weekend as US and Chinese officials meet tomorrow. The meeting shall be focused on Phase-1 trade deal implementation and other areas of conflicts between the two nations. Any disruptive development here might act as a huge trigger for markets on Monday.
GBPJPY ticked higher towards 104.20 levels yesterday. The exchange rate might come under renewed selling pressure if risk sentiment reversed over the next few sessions. The anti-risk Japanese Yen might strengthen if risk aversion returns, amidst a no deal on new fiscal stimulus in the US and US-China tensions.
Technical Analysis:
USDCHF might have carved a potential low around 0.9050 around August 05, 2020. Since then, the currency pair has managed to rally through 0.9200 mark before pulling back again. It is trading around 0.9100 mark as we prepare to publish and bulls should remain inclined to push through 0.9200 mark.
USDCHF drop from 1.0237 through 0.9050 seems to be corrective, as discussed last week. Ideally a minimum rally towards 0.9900 levels can be expected from here, if not any further. It could unfold as A-B-C corrective rally going forward.
Going further, the drop between 0.9900 through 0.9050 has also unfolded as a corrective A-B-C. Bulls would be poised to resume higher from here and push through 0.9900 resistance, before reversing lower again. Fibonacci 1.618 extension was also hit around 0.9140 levels as marked here.
Most traders would remain inclined to initiate fresh long positions from around 0.9100 levels with a protective stop around 0.9000 and projected target towards 0.9900 respectively. Only a break below 0.9000 would delay matters for a potential rally ahead.
Prepared by
Harsh Japee, Technical Analyst.
USDCHF Chart
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