USD/CHF has continued to drop this week due to the results of US Fed's last meeting. Fed officials worsened the outlook for GDP growth for the next few years and voiced the intention to raise interest rates at a slow pace. Weak statistics for February retail sales are also putting pressure on the American currency. The instability of the US economy makes investors put money in safer assets, such as the franc.
The data on initial and secondary jobless claims in the USA are worth attention today, but they will hardly reverse the current downtrend.
Support and resistance
Technically, the pair is trading within a downward channel and is tending to its lower border. The price is currently testing an important resistance level at 0.9500. Its breakdown will provide scope for a further decline to the levels 0.9445 (38.2% Fibonacci retracement level), 0.9380 and 0.9245 (50.0% Fibonacci retracement level). An upward correction to a level of 0.9600 (middle line of Bollinger bands) is also possible.
On the whole, technical indicators are confirming the probability of a further price decline. Bollinger bands are directed downwards. The MACD histogram is in the negative zone and its volumes have started increasing again. Stochastic lines reversed downwards.
Support levels: 0.9500, 0.9445, 0.9380 and 0.9245
Resistance levels: 0.9600 and 0.9690.
The current situation suggests that short positions should be opened after the price has broken a level of 0.9500. Their targets will be the levels of 0.9445 and 0.9380. Long positions will be relevant once the price reaches a level of 0.9530 after having crossed the level of 0.9500. Their target would be a level of 0.9600.