Current trend

After a rapid downward movement last month, the USD/CHF pair is trading in a correction trend at 0.8500. The franc is losing ground amid the fixation of some short positions.

Tomorrow, inflation data is due at 08:30 (GMT 2). According to preliminary estimates, in August the indicator will increase by 0.1% MoM, which will be enough for a correction from 1.3% to 1.2% YoY. Although inflation exceeds 1.0%, and economic growth cannot recover for the third quarter in a row, the Swiss economy seems more stable compared to the European one. Thus, the German consumer price index stays around 2.0%, and the French indicator slowed to 1.9%, while the gross domestic product (GDP) is balancing at 0.0% and 0.2%, respectively. Tomorrow at 09:00 (GMT 2), investors will pay attention to the Swiss data. The Q2 national economy may grow by 0.5%, maintaining a positive trend of 0.6% YoY and supporting the franc.

The American dollar has regained some lost positions and is trading at 101.20 in USDX. Tomorrow, investors will pay attention to business activity indices in key industries. The August manufacturing PMI may amount to 48.1 points compared to 48.0 points earlier, and the Institute for Supply Management (ISM) manufacturing PMI may reach 47.5 points, far from the growth zone of 50.0 points.

Support and resistance

On the daily chart, the trading instrument is correcting near the support line of the downward channel 0.8620–0.8300.

Technical indicators are holding the sell signal: fast EMAs on the Alligator indicator are retreating from the signal line, and the AO histogram is forming correction bars in the sell zone.

Resistance levels: 0.8550, 0.8730.

Support levels: 0.8400, 0.8210.

Trading tips

Short positions may be opened after the price declines and consolidates below 0.8400, with the target at 0.8210. Stop loss — 0.8500. Implementation period: 7 days or more.

Long positions may be opened after the price grows and consolidates above 0.8550, with the target at 0.8730. Stop loss — around 0.8450.