The USD/CHF pair has risen to around 0.8850 during Monday’s New York session, driven by a strengthening US Dollar amid anticipation of the Federal Reserve’s (Fed) interest rate decision on Wednesday.

Market Sentiment:

The US Dollar Index (DXY) has reached a fresh two-week high around 104.60 as the market awaits the Fed’s policy announcement. While the Fed is expected to keep interest rates unchanged, the persistent inflation above its 2% target could lead to discussions about potential rate cuts.

Currently, financial markets anticipate the Fed to initiate rate cuts from September, with another possible cut in November or December.

Swiss Franc Outlook:

The Swiss Franc’s direction will be influenced by the upcoming release of the Consumer Price Index (CPI) data for July on Friday. Economists predict a deflation of 0.2% for the monthly CPI, which could raise expectations of further rate cuts by the Swiss National Bank (SNB).

Technical Analysis:

The USD/CHF pair has rebounded strongly from the lower boundary of a Falling Channel formation on a daily timeframe. The 20-day Exponential Moving Average (EMA) at 0.8900 continues to act as a major resistance level for the US Dollar bulls.

The 14-period Relative Strength Index (RSI) is attempting to return to the neutral range of 40.00-60.00. If successful, this could signal an end to the bearish momentum, although the overall trend is expected to remain bearish.

Key Levels:

• Resistance: A decisive break above 0.8900 could open the door for further upside towards the July 17 high of 0.8945 and the psychological resistance of 0.9000.
• Support: A downside move below the July 25 low of 0.8777 could expose the pair to the March 8 low near 0.8730 and the round-level support of 0.8700.