The US Dollar (USD) extended upside movement against the Swiss Franc (CHF) on Friday, increasing the price of USDCHF to more than 0.9990 following the release of some key economic data from Switzerland. The technical bias already remains bullish because of a Higher Low (HL) in the recent downside move.
As of this writing, the pair is being traded around 0.9998. A hurdle may be noted near 0.9990-1.0000, the confluence of psychological number as well as horizontal support area as demonstrated in the following daily chart. A sustained break and daily closing above the 1.0000 resistance area could incite renewed buying interested towards the 1.0074 resistance, the 23.6% fib level.
On the downside, the pair is likely to find a support around 0.9918, the 38.2% fib level ahead of 0.9791, the 50% fib level and then 0.9660, the 61.8% fib level. The technical bias will remain bullish as long as the 0.9785 support area is intact.
The Consumer Price Index (CPI) –a key gauge for inflation- was released by the Swiss Federal Statistical Office today. According to the data, the CPI in Switzerland remained -0.4% in December as compared to -0.1% in the month before, missing the median projection of -0.3%. Generally speaking, higher CPI reading is considered positive for the economy and vice versa thus a worse than expected actual outcome spurred bullish momentum in the price of USDCHF.
Considering the overall technical and fundamental outlook, buying the pair around current levels appears to be a good strategy is we get a valid bullish engulfing pattern on the daily chart.