USD/CHF treads water around 0.96, FOMC eyed

The USD/CHF pair is moving sideways near the 0.96 handle in the early NA session as investors are gearing up for the FOMC's announcements. As of writing, the pair was trading at 0.9604, losing 0.25% on the day.

The Swiss National Bank recently published its quarterly bulletin, in which it said that the Swiss franc was still highly valued despite a weakening against the euro. The Bank also pointed out that it updated its annual inflation forecast to 0.4% from 0.3% in the previous quarter. Nevertheless, the pair's reaction remained limited as the SNB's view of the CHF was no surprise to the investors.

• SNB: Swiss franc remains highly valued and the situation on FX market is still fragile

Although no policy rate change is expected until December, the FOMC is likely to introduce the start of the balance sheet normalization today. Moreover, investors will be looking for hints regarding a rate hike in December. A downward revision to inflation forecasts in the updated economic projections report could hurt the probability of another hike happening in 2017 and weigh on the greenback. "We expect Yellen to emphasize that balance sheet normalization should run quietly in the background, that the next rate hike is, as always, data dependent, and that the negative economic impact of the hurricanes along with the negative inflation impact of idiosyncratic factors should both prove to be temporary" BMO CM analysts wrote in a recent report. 

• FOMC Preview: 13 major banks expectation from September meeting

Technical outlook

Amid a subdued trading action ahead of the Fed, most technical indicators show a neutral outlook on the H4 and daily charts. On the upside, the pair could find the first resistance at 0.9650 (20-WMA) followed by 0.9700 (psychological level/Sep. 14 high) and 0.9765 (Aug. 16 high). On the flip side, supports align at 0.9580 (20-DMA), 0.9500 (psychological level) and 0.9420 (Sep. 8 low).

• USD/CHF upside bias intact above 0.9530 – Commerzbank