USD/CHF Technical & Fundamental Outlook

Suggestion for Trade: Buy at 0.8860-0.8865, Stop Loss at 0.8840, Target 0.8990

USD/CHF yesterday bounced off from 0.88499 (61.8% fib level of last major move) and gave daily closing at 0.8872.

Major Support & Resistance Levels

At the moment in Asian session, the pair is around 0.8876 where it is likely to find an immediate support around 0.8860-0.8850 area, a break and close below this level may open doors for 0.8800 (trendline support) and then 0.8509 (50%fib level).

On upside, the pair may find resistance at 0.8900 (psychological level + hourly 55 MA) ahead of 0.8931 (hourly 100 MA) and then 0.8994 (55 MA on 4 hour chart).

Technical Indicators

MACD is bullish and positive divergence can also be seen on hourly timeframe. Relative Strength Index (RSI) is in oversold territory on daily timeframe which suggests a correction might be in play soon.

Fundamental Situation

Tuesday's U.S. budget deal, which downplays the risk of another government shutdown, has removed one element of uncertainty that it boosts the likelihood of the Federal Reserve beginning to taper asset purchases at its meeting on December 17-18, which could give rise to market volatility in the near-term, CNBC citing strategists reported on Wednesday.

Though US dollar seems under pressure despite tapering speculations, however, this deal shows that things are still very much in favor of US dollar and it should be a matter of relief for all USD pairs. Today US Treasury Sec Law is also scheduled to speak in US session.

Tomorrow Swiss National Bank (SNB) is to hold an important press conference during London session followed by benchmark interest rate decision, traders dealing in CHF pairs will be monitoring this development carefully.