General analysis USDCHF for 01.06.2022

USD/CHF: General analysis

Current dynamics

The USD/CHF pair is trading in an uptrend correction for the second day, after significant losses in May.

This was boosted by strong macro economic data from the previous day, which came in combination with continued signs of expected monetary policy tightening by the Federal Reserve to combat inflation in its upcoming meetings.

US President Joe Biden met yesterday with Fed Chairman Jerome Powell and Treasury Secretary Janet Yellen. The key topic of discussion was the fight against inflation. Remarkably, despite the importance and complexity of the issue of rising price pressures, the US President ended up making a simple populist statement: Respect the Fed... respect the independence of the Fed, which is what I have been doing and what I will continue to do".

For his part, US regulator official Christopher Waller said that interest rates should be raised by 50 basis points at the next meetings, noting the importance of this measure to keep inflation in check towards the central bank's target. Waller did not talk about a possible pause in the monetary policy tightening process, unlike his colleagues on the committee, which also provided additional support for the US currency.

Meanwhile, the Fed's divergence against most of its G10 peers along with bouts of geopolitical turmoil, higher US yields and a possible "hard landing" for the US economy continue to underpin the dollar's strength in the coming months.

Looking at the US economic calendar today, the ISM and JOLTS PMI will be one of the most important events that may affect the price dynamics of the USD/CHF pair, as well as the monthly jobs report that will be in focus, scheduled for release on Friday.

Support and resistance levels

On the 4-hour chart the instrument failed to consolidate above the Bollinger Bands moving average. The indicator is directed sideways and the price range has contracted, indicating that the current trend is about to change. The Momentum histogram is above the 100 level, which gives sell signals. Envelopes indicator gives clear signals for buy.

• Support levels: 0,95875, 0,95525, 0,95225.
• Resistance levels: 0,96150, 0,96425, 0,96700.

Trading scenarios

• Long positions should be opened at the 0,96150 with a target of 0,96425 and a stop loss at 0,95875. Implementation period: 1-2 days.

• Short positions can be opened at the level of 0,95875 with a target of 0,95525 and a stop-loss at the level of 0,96150. Implementation period: 1-2 days.