USDCHF Range-Bound as Dollar Momentum Fades Says UOB

United Overseas Bank (UOB) strategist Quek Ser Leang observed that the USD/CHF pair recently reversed sharply from a high of 0.8382 to close at 0.8286. In the short term, he expects the pair to edge lower toward 0.8245 while staying above 0.8225. On a 1-3 week view, he anticipates the pair will trade within a range of 0.8245-0.8365 after the prior upside momentum faded.

The USD/CHF pair initially rose to 0.8382 last Thursday before pulling back sharply to a low of 0.8291. On Friday, when the USD was at 0.8310, UOB indicated that the pullback had scope to extend but should stay within a range of 0.8280/0.8335. However, the USD briefly plunged to a low of 0.8225 during the NY session before rebounding to close at 0.8286, down 0.25%. While downward momentum increased, it was not sufficient to indicate a continued decline.

Looking ahead, UOB expects the USD to edge lower to 0.8245 today, with resistance at 0.8300. A breach of 0.8310 would suggest that the immediate downward pressure has eased. Over a 1-3 week view, UOB revised its USD view from positive to neutral, noting that upward momentum has fizzled out. The bank expects USD to trade between 0.8245 and 0.8365 for now, despite a brief drop below 0.8245.

Over a 1-3 month view, UOB still anticipates a rebound in the USD/CHF pair, though not strong enough to revisit the July peak. The overall outlook suggests a range-bound trading environment as the US Dollar momentum fades.