USD/CHF retreats from 2-mnonth tops, FOMC in focus

   •  A modest USD retracement prompts some profit-taking.
   •  Cautious mood provides an additional boost to CHF’s safe-haven appeal.
   •  Fed’s monetary policy outlook should help determine the near-term trajectory. 

The USD/CHF pair remained under some selling pressure through the early European session and has now eroded a major part of previous session's up-move to near 2-month tops. 

The pair stalled its bullish momentum and was being weighed down by a weaker tone surrounding the US Dollar, which struggled to preserve overnight strong gains. Adding to this, a cautious opening across European bourses provided an additional boost to the Swiss Franc's safe-haven appeal and further collaborated to the pair's downfall on Wednesday.

The pair, however, continues to hold comfortably above the key 0.9500 psychological mark as investors await the latest FOMC monetary policy update for some fresh impetus. With 25 bps interest rate hike nearly priced in, the key focus would be on the central bank's interest rate outlook for the rest of 2018, which along with the new Fed Chair Jerome Powell's comments at the post-meeting press conference will help investors determine the pair's next leg of a directional move.

Technical levels to watch

The 0.9500 handle is likely to protect the immediate downside, which if broken might prompt some additional weakness and drag the pair back towards 0.9435-30 support area. On the upside, momentum beyond 0.9565 level now seems to assist the pair to reclaim the 0.9600 handle before eventually darting towards important moving averages (100 & 200-day SMA) confluence resistance near the 0.9655-65 region.