USDCHF

USD gained momentum holding its strength after FOMC meeting and fourth quarter GDP numbers released. Fourth-quarter GDP data validates the Federal Reserve's decision to taper its asset purchases, boosting hopes for a strong 2014. They gave strong forward guidance through commitment to keep interest rates at the record lows for longer. The Commerce Department said US GDP grew at a seasonally adjusted annual rate of 3.2% in the fourth quarter, which is a positive fundamental factor. It raises the optimism towards the US dollar. It managed to maintain its strength against major currencies. Fair value deviations call for a stronger USD against all other currencies.

The GDP figures reveal the health of the largest economy in the world lingering for the 11th straight quarter. The US economy gathers momentum with capacity utilisation rates at their long-term average and the output gap set to narrow going forward. Manufacturing , construction and home sales not recovered fully. As a whole, the economy looks great on the strength of the strongest consumer spending in three years. Consumer spending surged in the October-December quarter at an annual rate of 3.3% led by durable goods like computers, cars and communications equipment and non-durable goods like clothing spending on services.

Recovery in Europe benefits export-oriented sectors of the Swiss economy. As expected, domestic economic dynamics to soften and out growth forecasts falls substantially short of the consent view.

We expect the Swiss Franc to weaken against USD. The pair USD/CHF has been trying hard to break the 38.2% retracement mark for the last two months. In the daily chart, the pair is trading above 21DEMA; oscillators give a buy signal. From December 2013 low of 0.8800, the pair moved towards the higher levels 0.9157 after that gone through correction. This week, the pair managed to close above the level 0.8935, whereas 0.8900 is the strong bull support.

In Asia's trading session, the pair is trading at the level 0.9024. Yesterday's high of 0.9048 is very crucial in coming sessions. If the pair crosses yesterday's high, the immediate resistance will be at the level of 0.9105.

We recommend to buy the pair USD/CHF with sl 0.8800 for the higher targets 0.9838 and 0.997.