USD/CHF finds temporary support, still weak for third straight day

Extending its sharp reversal from multi-week highs touched post Wednesday’s FOMC statement, the USD/CHF pair dropped to a fresh two-week low and is currently trading just below 0.9800 handle.

On Friday, disappointment from BOJ announcement led to a broadly weaker US Dollar and dragged the USD/CHF major lower for third consecutive day. The pair dropped to test 50-day SMA before finding a temporary support at 50-day SMA. 

Wednesday's Fed monetary policy statement was deemed dovish by markets and failed to assist the pair to build on to its break-out momentum above the very important 200-day SMA. Immediately after the announcement, the pair did spike to May highs strong resistance near 0.9950-55 region but reversed quickly and extended its slide on Thursday further below 200-day SMA.

Investors now turn their attention to the very important release of quarterly GDP growth figures from the US, which if disappoints would pour cold water on expectations of an eventual Fed rate-hike in 2016. However, a surprisingly strong reading would be highly supportive for the greenback and should trigger a sharp short-covering rally in the USD/CHF pair.

Trade the US Gross Domestic Product - July 29 GDP Live Coverage

Technical levels to watch

Weakness back below 50-day SMA support near 0.9775-70 area seems to drag the pair immediately towards 100-day SMA support near 0.9735 region, which if broken would negate possibilities of any further up-move for the pair and turn it vulnerable to extend its slide in the near-term.

On the flip side, recovery momentum above 0.9800-0.9820 immediate resistance might now confront strong resistance at 200-day SMA near 0.9860 region. A sustained strength 0.9860 resistance now seems to open room for extension of the pair's upward trajectory, beyond May highs resistance near 0.9950-55 zone, towards reclaiming parity.