USDCHF struggles with solid resistance ahead of Fed’s meeting

In a cautious trading day ahead of a crucial Federal Reserve meeting, the US dollar index remains steady within its daily range on Wednesday.

The Federal Reserve will announce its latest policy announcement later today, and Chairman Powell's press conference will begin half an hour afterwards. A step toward higher interest rates is expected to come with the accelerated end of the Fed's bond-buying program, and market participants would interpret that as an attempt to control consumer prices, rising at their highest rate in almost 40 years.

Investors are looking forward to the Fed announcement to see whether it will sway the dollar in favour of rate hikes in 2022 or higher revised inflation, which no longer appears transitory.

Two rate hikes will boost the dollar while higher inflation may soften the GDP growth forecast and result in a weaker USD.

Price action has printed interesting waiting setups in major currency pairs on their intraday chart as traders wait for the Fed's upcoming market mover.

USD/CHF technical view

Among them, the USD/CHF pair climbed near the top of its weekly trading range. The pair, however, failed to capitalize on the gains beyond the 0.9250 firm barrier, located at the upper edge of the wedge pattern.

In the meantime, traders are likely to take cues from the Fed's announcement that will influence USD price dynamics. Furthermore, the broader market risk sentiment may also provide short-term trading opportunities around the USD/CHF pair.

If sellers maintain their resistance, the price will drop to test the 50-EMA, located around the previous bottom, at 0.9232. A crossing below this barrier could intensify the selling pressure to push the price below the 200EMA around the boundary between the 0.9227 and 0.9225 hurdles. A break below this area of interest would further decline towards the lower edge of the pattern around the 0.9187 support.

If the USD/CHF bulls gain strength, a break above the 0.9248 handle could lead towards 0.92552. The price might reach the two-week high at 0.9273 if this obstacle is overcome.