Swiss Franc Strengthens as USD/CHF Tests 0.8800 Support Zone
USD/CHF edges lower towards 0.8800 as Swiss Q3 GDP data approaches.
FUNDAMENTAL OVERVIEW:
- USD/CHF slips to approximately 0.8815 in the early European session on Friday.
- The growing anticipation that the Fed may slow its rate-cutting cycle could bolster the USD.
- Switzerland’s third-quarter GDP growth report will be the key focus on Friday.
The USD/CHF pair is experiencing a decline, hovering around 0.8815 during the early European session on Friday, as the US Dollar (USD) weakens broadly. Market participants are awaiting Switzerland’s third-quarter (Q3) Gross Domestic Product (GDP) data, set to be released later today.
The US Dollar is under pressure due to profit-taking ahead of the long Thanksgiving weekend. However, strong US economic data and the Federal Reserve’s cautious stance could provide some support to the USD in the near term. According to the minutes from the latest Federal Open Market Committee (FOMC) meeting, officials expect gradual interest rate cuts as inflation eases and the labor market remains robust.
Switzerland’s Q3 GDP report will be a key focus on Friday, with the economy expected to grow by 0.4% quarter-on-quarter, down from 0.7% in Q2. Year-on-year, Swiss GDP is projected to hold steady at 1.8% in Q3. A weaker-than-expected GDP result could undermine the Swiss Franc (CHF) and provide upward momentum for the USD/CHF pair.
In global developments, Russia launched its second major attack on Ukraine’s energy infrastructure this month on Thursday, causing significant power outages across the country. An escalation in the Russia-Ukraine conflict could lead to increased demand for safe-haven currencies like the CHF, potentially boosting it against the USD.
USD/CHF TECHNICAL ANALYSIS DAILY CHART:
Technical Overview:
USD/CHF is trading within an up channel.
USD/CHF is moving above all the Moving Averages (SMA).
The Relative Strength Index (RSI) is in the Buying Zone, while the Stochastic oscillator suggests a Neutral trend.
Immediate Resistance level: 0.8883
Immediate support level: 0.8792
HOW TO TRADE USD/CHF
After a significant decline, USD/CHF found support and rebounded strongly. The pair has recently encountered resistance and is now pulling back to retest key support. If this support holds, a potential retracement to Fibonacci levels could precede another upward move.