USDCHF Technical Analysis – This breakout might be significant

US:

• The Fed hiked by 25 bps as
  expected and kept everything unchanged at the last meeting.
• Fed Chair Powell reaffirmed their data dependency
  and kept all the options on the table.
• Inflation measures
  since then showed further disinflation.
• The labour market
  displayed signs of softening although it remains fairly tight.
• Overall, the economic data started to surprise to
  the downside lately.
• The Fed members are leaning more towards a pause
  rather than another rate hike.
• The market doesn’t expect the Fed to hike anymore.

Switzerland:

• The SNB raised interest rates by 25 bps as expected at the last
  meeting and communicated that additional rate hikes cannot be ruled out as it
  maintains the hawkish stance.
• The Switzerland CPI showed the inflation rate easing
  even more within the SNB 0-2% target band.
• The Unemployment Rate ticked higher a little.
• The Manufacturing PMI remained in strong contraction.
• The market expects the SNB to pause
  at the next meeting.

USDCHF Technical Analysis –
Daily Timeframe

On the daily chart, we can see that USDCHF recently
broke out of the key downward trendline and
0.8858 resistance. This
has opened the door for much higher prices with the first strong level coming
in at 0.9122. The trend is clearly bullish as the price has been printing
higher highs and higher lows and the moving averages are
crossed to the upside. The red 21 moving average continues to be a strong
dynamic support with the buyers leaning on it to position for higher prices. In
case we see another pullback into the moving average, we can expect the buyers leaning
on it again.

USDCHF Technical Analysis –
4-hour Timeframe

On the 4-hour chart, we can see that USDCHF is
trading within a rising channel and that it’s been diverging with the
MACD for a
long time. This is generally a sign of weakening momentum often followed by
pullbacks or reversals. The price is now at the upper bound of the channel, so
we might see a correction from here into the lower bound of the channel.

USDCHF Technical Analysis –
1-hour Timeframe

On the 1-hour chart, we can see that we
have a meaningful trendline within the channel that is defining the current short-term
uptrend. The sellers are likely to step in here with a defined risk above the
channel to target a fall into the lower bound of the channel around the 0.88
handle. If the price breaks below the trendline, the sellers will pile in even
more aggressively as that would give further confirmation for a bigger
correction. The buyers, on the other hand, are likely to lean on the trendline
where we have also the confluence with
the Fibonacci
retracement levels and the 4-hour red 21 moving
average.

Upcoming Events

This week is a bit empty on the data front with just the
US ISM Services PMI today and the US Jobless Claims tomorrow being the main
highlights. The market pricing is unlikely to change unless the data comes in
really hot in which case, we should see the US Dollar strengthening. On the
other hand, weaker readings might just bring forward rate cuts expectations and
weigh on the greenback in the short term.