Fundamental
Overview
The USD has been stronger
since last Friday following the US NFP report where the data surprised with solid jobs
and wage growth. There were also negatives like the uptick in the unemployment
rate, but all in all, we can say that it was a good report.
The data triggered a
hawkish repricing in interest rates expectations with the market now expecting
once again just one cut by the end of the year. It’s not a big deal in the
bigger picture, but for now the sentiment is bullish for the greenback and we will
likely need a catalyst to change it again.
The CHF, on the other hand,
got a boost a couple of weeks ago from SNB’s Jordan comments where he said that if upward risks
to Swiss inflation were to materialise, these would most likely be associated
with a weaker franc, which could be counteracted by selling foreign exchange reserves
(buying CHF).
On top of that, the
greenback remained on the backfoot across the board amid the risk-on sentiment.
The NFP changed that sentiment though and today’s US CPI might either reinforce
it or turn it around again.
USDCHF
Technical Analysis – Daily Timeframe
USDCHF Daily
On the daily chart, we can
see that USDCHF sold off all the way to the 0.8885 level where we had also the
38.2% Fibonacci
retracement level of the entire rally from the cycle low at 0.8333 before
bouncing back following the US NFP release.
We can expect the sellers
to step in around the support-turned-resistance
around the 0.90 handle to position for a drop into new lows. The buyers, on the
other hand, will want to see the price breaking higher to increase the bullish
bets into new highs.
USDCHF Technical
Analysis – 4 hour Timeframe
USDCHF 4 hour
On the 4 hour chart, we can
see that we have also the 38.2% Fibonacci retracement level for confluence
around the 0.90 resistance.
The price action today will
depend on the US CPI report. In fact, if we get hot figures, we can expect the
pair to rally further and likely reach the trendline
around the 0.91 handle. On the other hand, soft data will likely lead to a drop
with high chances of seeing new lows.
USDCHF Technical
Analysis – 1 hour Timeframe
USDCHF 1 hour
On the 1 hour chart, we can
see that we have a good support around the 0.8950 level which is defining the
current consolidation. The red lines show the average
daily range for today but do note that the price can extend beyond them
when there are strong catalysts like today’s US CPI report, so be careful.
Upcoming
Catalysts
Today we get the US CPI data and the FOMC rate decision. Tomorrow,
we have the US PPI and the latest US Jobless Claims figures. On Friday, we
conclude the week with the University of Michigan Consumer Sentiment survey.