USD/CHF: Technical analysis: SNB and FOMC meeting playing major roles this week
The Swissy is certainly in the spotlight this week not only due to technical reasons but fundamentals as well.
On the technical side, USDCHF is currently testing a key weekly demand level around the 0.98400- 0.98700 zones. A weekly closure above 0.98500 may trigger buyers. This weekly support has been rejected several times in the past, with the pair bouncing strongly (around 120 pips each upside movement). The daily candles are still not providing a clear entry, that's why we expect this pair to remain neutral until the FOMC meeting on Wednesday and the SNB meeting on Thursday. Traders should only take a concrete trade when the level gets rejected or broken. A closure below 0.98400 can send the Swissy back to the next support at 0.98000.
The main events impacting USDCHF during the next trading sessions will be the SNB Monetary Policy decision on Thursday and the last FOMC meeting of the year. Regarding the first event, traders are expecting the Swiss National Bank to stick with its negative rate strategy. The expansive monetary strategy will remain on hold at least for one more quarter (according to many economists). Even though the negative rate policy has been extremely controversial, the SNB has maintained this stand for years and is not willing to take the risk now.
Regarding the greenback, the FOMC Conference will be playing a key role. Rate Decision is expected to remain the same (1.50%), however, Powell may be giving clues of the path that the US monetary policy will be following in 2020. After the positive employment report published last Friday, the FOMC board my be giving an upbeat outlook of the health of the American Economy. If Powell signals any possible downturn (such as the one happening in US Manufacturing Activity), then the greenback can significantly weaken against the Swiss Franc. I am favouring the disclose of a few surprises on Wednesday, so stay tuned!