Ella 
USD/CHF paused its four-day winning streak as the market hesitated over the direction of the greenback.
Fitch downgraded U.S. credit rating, but market participants dismissed concerns.
CHF bulls are hopeful with continued trading above key moving averages in an uptrend channel from last Friday.
Sellers need validation from the 0.8700 support confluence to regain control.
USD/CHF steadied around 0.8750 as bulls ran out of steam after holding the upper hand for four straight sessions ahead of Wednesday’s European session. The pair’s recent consolidation may be related to the market’s efforts to justify the downgrade of the U.S. credit rating, as bankers and White House officials dismissed concerns of any significant negative impact from the downgrade by Fitch Ratings.
Aside from the subdued USD, a steady RSI (14) also boosted USD/CHF bulls. However, the uptrend channel formed since last Friday (currently between 0.8790 and 0.8700) keeps buyers of the pair hopeful.
Even so, an impending bullish crossover on the MACD, a successful break above key moving averages, and the aforementioned bullish channel all support the uptrend in USD/CHF.
Still, the confluence of Monday’s rising trendline and the 50-hour moving average (HMA), which was last around 0.8730, limits near-term downside for the CHF.
After that, the 100-HMA and said channel floor (closer to the 0.8700 round figure at press time) could be the last line of defense for USD/CHF buyers.
If USD/CHF is dominated by a bearish break above 0.6700, a drop towards last week’s yearly low around 0.8550 cannot be ruled out.
Conversely, an upside break above the channel topline near 0.8790 needs validation at the 0.8800 round-figure mark to help USD/CHF bulls challenge the May bottom near 0.8820 and dominate thereafter.
