Fundamental overview:
USD/CHF is expected to consolidate with a bullish bias. Upside movement is limited by the weaker dollar sentiment (ICE spot dollar index last 93.29 versus 93.41 early Friday) after a worse-than-expected drop in the University of Michigan consumer sentiment index to 88.6 in May from 95.9 in April (versus forecast 95.5), bigger-than-expected 0.3% on-month drop in the US April industrial production (versus forecast -0.1% ), lower-than-expected capacity utilization of 78.2% (versus forecast 78.3%), and weaker-than-expected rise in the Empire State's business conditions index to 3.09 in May from -1.19 in April (versus forecast 5.0). But USD/CHF losses are tempered by the franc sales on buoyant EUR/CHF cross and negative Swiss interest rates; the threat of the Swiss National Bank CHF-selling intervention.
Technical comment:
The daily chart is negative-biased as the MACD and stochastics are bearish, five- and 15-day moving averages are declining.
Trading recommendations:
The pair is trading above its pivot point. It is likely to trade in a wider range as long as it remains above its pivot point. As long as the price holds above its pivot point, long positions are recommended with the first target at 0.9240 and the second target at 0.9295. In the alternative scenario, short positions are recommended with the first target at 0.9060 if the price moves below its pivot points. A break of this target is likely to push the pair further downwards, and one may expect the second target at 0.8970. The pivot point is at 0.9140.
Resistance levels:
0.9240
0.9295
0.9345
Support levels:
0.9060
0.8970
0.89
