USD/CHF Price Analysis: Volatile To Squeeze Further Amid Triangle Formation

The USD/CHF pair has paused for a while after a solid recovery from below 0.9040 in the European session. The Swiss Franc asset is expected to extend its rally above the immediate resistance of 0.9070. The major is following the footprints of the US Dollar Index (DXY), which has refreshed its day’s high to near 104.10.

Losses in the S&P500 futures have increased further as investors are worried about the United States’ economic prospects. The market participants have underpinned the risk aversion, which has improved the appeal of the US Dollar Index.

Meanwhile, investors anticipate that the Swiss National Bank (SNB) will raise interest rates further as SNB Chairman Thomas J. Jordan said that the demerits of a highly inflated environment are higher than higher interest rates.

USD/CHF is marching towards the downward-sloping trendline of the Descending Triangle pattern plotted from May 31 high at 0.9148 hourly. The horizontal support of the aforementioned chart pattern is placed from June 02 low at 0.9035. The Descending Triangle formation indicates a volatility contraction followed by an expansion.

The Swiss Franc asset has sharply moved above the 20-period Exponential Moving Average (EMA) at 0.9062, which indicates that the short-term trend has turned bullish and the upside momentum is powerful.

The Relative Strength Index (RSI) (14) has rebounded into the 40.00-60.00 range from the bearish range of 20.00-40.00, portraying a bullish reversal.

In the future, a decisive break above the intraday high at 0.9073 will drive the asset toward the round-level resistance of 0.9100, followed by March 28 low at 0.9137.

In an alternate scenario, a downside move below May 16 low at 0.8929 will drag the asset toward April 14 low at 0.8867. A slippage below April 14 low will further remove the asset toward May 04 low at 0.8820.

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