USD/CHF retreats from 7-week lows, bullish bias remains intact

• USD/CHF slides on the back of a weak US Dollar. 
• Pair remains within a bullish channel despite retreat. 
• Key event ahead: FOMC meeting. 

The USD/CHF dropped on Monday after a 3-day rally. During the Asian session, the pair peaked at 0.9549, the highest since January 24 but lost strength and pulled back to the 0.9500 region. 

The US dollar reached a fresh daily low near the end of the US session at 0.9493 and it was hovering around 0.9500. 

The main mover was the decline of the US dollar. The Swiss franc benefited from the rally of the euro following reports of debates among ECB members about rate hikes. 

The decline of the greenback took place the day before the beginning of the 2-day FOMC meeting. The Federal Reserve is expected to rate hikes on Wednesday. With the hike already price in, analysts from the National Bank of Canada consider that the real interest will be to see if the FOMC raises its 2018 and 2019 end-of-year rate targets. “For that to happen in 2018, at least four of the 12 members who were projecting the appropriate fed funds rate to be 2.125% or less at the end of the year would have to revise their assessment upward.”

Technical outlook 

USD/CHF lost strength near the 0.9550/60 resistance area. It was followed by a correction of last week rally. The retreat so far found support around 0.9500 and above the 20-SMA in four-hour charts. 

Price continues to move within a bullish channel as it has been the case during the last four weeks. The key support might be seen at 0.9460 (uptrend line). A break lower could lead to an acceleration to the downside.