USDCHF Technical Analysis – Watch this key support

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.
• The US CPI last
  week came in line with expectations, so the market’s pricing remained roughly
  the same.
• The labour market
  displayed signs of softening although it remains fairly solid.
• The other important economic data like the ISM
  Services PMI, Jobless Claims and Retail Sales all beat expectations recently.
• The Fed members are leaning towards a pause in
  September and the next decision will still be dictated by the economic data.
• The market doesn’t expect the Fed to hike today,
  but there’s now basically a 50/50 chance of a hike in November.

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 remaining
  within the SNB 0-2% target band.
• The Unemployment Rate matched the previous reading
  remaining low.
• The Manufacturing PMI remained in strong contraction.
• The market expects the SNB to pause
  at the upcoming meeting.

USDCHF Technical Analysis –
Daily Timeframe

On the daily chart, we can see that USDCHF has been
in a strong uptrend since August as the US data remined strong while the
Switzerland data kept on surprising to the downside. The Switzerland inflation
rate is also within the SNB’s target band, so the market has likely positioned
already for a pause at the upcoming meeting. Looking ahead, the pair seems to
be targeting the 0.9122 resistance and if
we get a bigger pullback, the buyers are likely to lean on the upward trendline where we
can also find the confluence with the
red 21 moving average.

USDCHF Technical Analysis –
4-hour Timeframe

On the 4-hour chart, we can see that the pair
recently broke out of a minor resistance, retested it, and climbed up further.
The bullish momentum though is clearly weaker, and we can also see that from
the divergence with the
MACD which is
usually a sign of waning momentum often followed by pullbacks or reversals. In
this case, if the price breaks below the recent resistance turned support around
the 0.8945 level, we can expect a fall into the upward trendline where the
buyers will step in to target a new high. The sellers, on the other hand, will
pile in both on a break below the 0.8945 support and on an eventual break below
the upward trendline.

USDCHF Technical Analysis –
1-hour Timeframe

On the 1-hour chart, we can see more
closely the support zone around the 0.8945 level. From a risk management
perspective, the buyers would be better off to wait for a pullback into the
support and pile in with a defined risk below it to target a new high. The
sellers, on the other hand, should wait for a break below the support before getting
the confirmation of a bigger correction.

Upcoming Events

This week has just a couple of important economic
releases with the FOMC and SNB rate decisions being the highlights. Today, the
Fed is expected to keep rates unchanged, and the markets will focus more on the
Dot Plot and Fed Chair Powell’s press conference, although he’s likely to
repeat that they remain data dependent. Tomorrow, the SNB is expected to keep
rates unchanged although there’s also a good chance that they raise by 25 bps
again, while later in the day we will see the latest US Jobless Claims report.
On Friday we conclude the week with the US PMIs data.