Fundamental
Overview
After the strong push lower
from last Friday when Fed Chair Powell delivered a more dovish than expected speech at the Jackson Hole Symposium, the USDCHF
pair hasn’t moved much as the lack of catalysts this week kept the price action
at bay.
The market is waiting for
the key economic releases next week, and especially the NFP report, as that
will likely decide whether the Fed is going to deliver a standard 25 bps cut or
go for a more aggressive 50 bps cut in September.
Right now, it looks like
the Fed is going to cut rates into a resilient economy, so one has to be
mindful that we might eventually get an increase in economic activity that
could lift long term yields.
That might not be the
market’s focus at the moment because we will need a catalyst to change the
narrative, but it’s something to keep an eye on. The focus right now is on the
US labour market data as more weakening could not only trigger a more
aggressive Fed easing but also bring back recessionary fears which should
support the Swiss Franc.
On the other hand, SNB’s
Jordan yesterday spoke at an event in Riehen and mentioned how the Swiss Franc
strength makes life tougher for the Swiss industry. It sounds like the central
bank President isn’t happy about the exchange rate. That’s something to keep an
eye on as the SNB might intervene to weaken the CHF.
USDCHF
Technical Analysis – Daily Timeframe
USDCHF Daily
On the daily chart, we can
see that USDCHF broke the August low this week and bounced around the 0.84
handle. The buyers will want to see the price breaking above the 0.8555 level
to start targeting the 0.8730 level next. The sellers, on the other hand, will
likely step in around the 0.8555 level to position for a drop into the 0.8333
level.
USDCHF Technical
Analysis – 4 hour Timeframe
USDCHF 4 hour
On the 4 hour chart, we can
see that from a risk management perspective, the sellers will have a better
risk to reward around the 0.8555 level where they will also find the 38.2% Fibonacci retracement level for confluence. The buyers, on the other hand,
will want to see the price breaking higher to increase the bullish bets into
the major trendline around the 0.8650 level.
USDCHF Technical
Analysis – 1 hour Timeframe
USDCHF 1 hour
On the 1 hour chart, we can
see that the price is currently trading in a tight range between the 0.8493 resistance
and the 0.8452 support. The buyers will want to see the price breaking higher to
increase the bullish bets into the 0.8555 level next. The sellers, on the other
hand, will want to see the price breaking lower to position for a drop into new
lows. The red lines define the average daily range for today.
Upcoming
Catalysts
Today we conclude the week with the US PCE report.