Current trend

The USD/CHF pair is trading in a corrective trend at 0.8697, preparing for a strengthening of the uptrend: the franc is supported by a relatively stable situation in the national economy.

The consumer price index (CPI) amounted to 107.2 points, which is only 0.8% higher than the same indicator a year earlier, allowing the Swiss National Bank to continue easing monetary policy, while the interest rate is already at a comfortable level of 1.00%. The next meeting of the regulator will be held on December 12, during which the cost of borrowing may be adjusted again by ˗25 basis points. Before the meeting, new data on inflation and gross domestic product (GDP) will be published, but, according to analysts, they will not have a significant impact on the authorities' decisions, since returning economic growth to acceptable levels is now a priority.

In turn, the American currency is trading around 104.30 in USDX today, which is the maximum since July 30. Last week, investors paid attention to the preliminary October data on business activity in the United States: the Manufacturing PMI increased from 47.3 points to 47.8 points against preliminary estimates of 47.5 points, and the Services PMI – from 55.2 points to 55.3 points instead of the expected decrease to 55.0 points. Thus, the economy maintains signs of growth against the background of the recovery of activity in the non-manufacturing sector. Positive sentiment in the market strengthened with reports on consumer demand, while the volume of orders for durable goods decreased in September by 0.8%, like in the previous month, and the core indicator added 0.4%, while analysts expected ˗0.1%. In addition, the consumer sentiment index from the University of Michigan reached 70.5 points in October from 70.1 points previously. These data support the likelihood of a more cautious approach by the US Federal Reserve to further easing of monetary policy. In this regard, it is worth mentioning the comments of the head of the Cleveland Federal Reserve Bank (FRB) Beth Hammack, who said yesterday that inflationary pressure in the economy is declining but have not yet reached the necessary level of 2.0%.

Support and resistance

On the D1 chart, the price continues to correct, gradually moving away from the resistance line of the descending channel with boundaries of 0.8550–0.8350.

Technical indicators strengthen the buy signal that was received in the middle of the month: fast EMAs on the Alligator indicator are moving away from the signal line, and the AO histogram is in the buy zone, forming new ascending bars there.

Support levels: 0.8650, 0.8510.

Resistance levels: 0.8730, 0.8890.

Trading tips

If the growth continues, and the price consolidates above the resistance level of 0.8730, buy positions with a target of 0.8890 will be relevant. Stop loss – 0.8650. Implementation period: 7 days and more.

If the decline continues, and the price consolidates below the support level of 0.8650, one can open sell positions with a target of 0.8510. Stop loss – 0.8750.