The USD/CHF plunged as the Dollar Index turned to the downside after finding strong resistance. The greenback reacted negatively to higher inflation. As you already know, the CPI rose by 0.4% versus 0.3% expected, while the Core CPI increased by 0.2% matching expectations.
The USD/CHF is located at the 0.9232 level far below the 0.9308 yesterday's high. In the short term, it could extend its drop if the DXY reaches fresh new lows. Today, the Switzerland PPI is expected to register a 0.9% rise versus 0.7% growth in the previous reporting period.
The United States PPI could report a 0.6% increase in September, while the Core PPI is expected to grow by 0.5%. In addition, the Unemployment Claims indicator is expected to drop from 326K to 315K.
The USD/CHF pair found strong resistance at the weekly R1 (0.9310) and at the descending pitchfork's upper median line (uml). Now it has dropped below the uptrend line which was seen as major support.
It was almost to reach the 0.9230 weekly S1 which stands for static support. Validating its breakdown below the uptrend line may signal a bearish reversal. Still, after the current massive sell-off, USD/CHF could try to rebound and recover.
The price stands below the uptrend line and above the weekly S1 (0.9230). Despite its drop below the uptrend line, USD/CHF is still in a support zone. Making a valid breakdown below the S1 could activate more declines towards the descending pitchfork's median line (ml).
Also, testing and retesting the broken uptrend line could bring us fresh selling opportunities. Technically, a larger drop could be invalidated if the rate comes back and stabilizes above the uptrend line.