- Investors ignored positive GDP data from Switzerland on Tuesday morning.
- Dollar bulls are returning to the market amid rising inflation.
- A bullish RSI divergence is in play in the charts.
On Tuesday morning, the USD/CHF price is trying to recover from a one-month low as it trades above the 0.9600 level. There was the release of positive GDP data from Switzerland. GDP (QoQ) rose more than investors expected, to 0.5% from the previous 0.2%. GDP (YoY) (Q1) also rose higher than the previous 3.6%.
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Investors, however, ignored all this as USD/CHF kept pushing higher because of a stronger dollar. This move could mean that investors are paying more attention to the dollar, which has regained its appeal amid recession fears.
Dollar bulls are back in the market after recent hawkish comments from Fed Governor Waller that there would be no point pausing rate hikes until the bank-controlled inflation. Can inflation get under control with the rising energy prices?
The EU has agreed to cut 90% of Russian oil imports by the end of the year. This news has seen oil prices rise, and investors lose hope of inflation coming down. For this reason, Joe Biden and Fed Chair Powell are set to meet later in the day; To discuss the state of the American and global economies. Things are bad now, and they could get worse. This state of affairs can only mean a tighter monetary policy in the US and a rising dollar.
Were the dollar bulls gone, or were they just resting and waiting to get back in stronger? We could see USD/CHF pushing higher in the coming days if they are back.
Later in the day, investors will wait to see the CB consumer confidence in the US and the speech from SNB Governor Zurbrugg.
USD/CHF price technical analysis: Bullish RSI divergence
The 4-hour chart shows a slowdown in bearish momentum after a steep move. The price is currently trading at 0.9600, experiencing resistance from the 30-SMA. RSI has been moving higher despite the lower prices, showing a bullish divergence. This divergence might lead to prices breaking above the 30-SMA and getting to 0.9750 or higher.
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Until we can see a break of the SMA, the bias here remains bearish as the current SMA resistance could hold, pushing prices lower.
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Saqib Iqbal
