Current dynamics

After an unsuccessful attempt to break through the resistance level of 0.8890, the USD/CHF pair dropped to the region of 0.8834 against the backdrop of a correction in the US dollar exchange rate, which, after growing by more than 6.0% in the USDX in October-November, lost its gained positions, finding itself under pressure from weak macroeconomic data.

In particular, according to the results of October, the number of issued permits for the construction of real estate decreased by 0.6% to 1.416 million, the volume of new home construction - by 3.1% (the previous value was adjusted from -0.5% to -1.9%), while in absolute terms the indicator was 1.311 million, below the forecast of 1.340 million and the previous value of 1.353 million. Thus, the sector is under pressure, which in previous conditions could have contributed to a reduction in the cost of borrowing by the US Federal Reserve, but now it is impossible to predict the steps of monetary authorities, since officials are expecting the tax cuts announced by President-elect Donald Trump, which could act as a catalyst for accelerating inflation, the consequences of which will have to be offset by monetary measures.

Meanwhile, the Swiss industrial sector is recording a drop in orders and sales amid weak demand from European countries and a strong franc, and the negative dynamics may continue after the inauguration of Donald Trump on January 20, who has already announced the introduction of additional trade tariffs during his election campaign. Thus, the industrial association Swissmechanic has already recorded a decline in the Swiss business climate index to the lowest level since January 2021: three quarters of companies consider the current business situation unfavorable. According to analysts' calculations, the capacity utilisation at small enterprises is currently only 81.0% - the lowest since January 2021.

From the technical analysis point of view, the USD/CHF pair is trading in a long-term downtrend, and the key resistance is located in the 0.8890 area. Last week, the bulls already tested this mark, but it was held by sellers, after which the price fell slightly, but the chart still indicates the possibility of a correction. If the resistance level of 0.8890 is broken upwards during trading, the long-term trend will change, and in this case, the upward movement will likely strengthen and the area of 0.9020, 0.9150 will be reached. If the 0.8890 mark is held, the new target for the decline will be 0.8738, and then 0.8625. The RSI (14) indicator entered the overbought area last week, which indicated a potential stop in growth and the formation of a downward movement in the medium term, but at the moment the line is in the neutral zone.

The medium-term trend is upward: last week, trading participants reached target zone 2 (0.8921–0.8892), which was eventually held by sellers, which served as a driver of the downward correction. The movement will likely continue to the support zone of 0.8773–0.8760, after testing which it is worth considering new purchases with a target at the November maximum of 0.8917. A breakout of target zone 2 upwards will lead to a continuation of the medium-term trend with a target in the range of 0.9157–0.9133. Its border is far from the current price, at 0.8634–0.8607, and if this area is reached within the correction, it will be possible to consider long positions with a target of 0.8917.

Support and resistance levels

Resistance levels: 0.8890, 0.9020, 0.9150.

Support levels: 0.8738, 0.8625, 0.8520.

Trading scenarios

Short positions should be opened from the level of 0.8862 with a target of 0.8740 and a stop-loss of 0.8912. Implementation period: 9–12 days.

Long positions should be opened above the level of 0.8922 with a target of 0.9021 and a stop loss of 0.8888.