In the European trading session on Thursday, the USD/CHF pair continues its downward trend for the second consecutive day, hovering near 0.8510. Investors are diverting their attention away from the US Dollar (USD), possibly fueled by speculations surrounding the Federal Reserve’s (Fed) contemplation of five interest rate cuts in 2024.
The 14-day Relative Strength Index (RSI), a key technical indicator, signals a bearish sentiment for the USD/CHF pair as it remains below the 50-mark. Additionally, the Moving Average Convergence Divergence (MACD) line, positioned below the centerline, is above the signal line, indicating a restrained momentum in the EUR/USD pair. Market participants are likely to exercise caution, awaiting confirmation from this lagging indicator.
Potential scenarios for the USD/CHF pair include a breach of the psychological support at 0.8500, followed by the weekly low at 0.8460 and a significant support level at 0.8450. A break below the latter could propel the USD/CHF pair towards the critical level around 0.8400.
On the upside, the immediate resistance zone is marked by the 23.6% Fibonacci retracement level at 0.8547, along with the 21-exponential Moving Average (EMA) at 0.8549. A breakthrough above this zone might encourage the USD/CHF pair to explore the psychological region around the 0.8600 level. Traders and investors are closely monitoring these levels as the currency pair navigates through challenging market conditions.