Last week, the USDCHF fell toward the 200 day MA but that MA stalled the fall before racing higher on the CPI news on Tuesday.
Today, to start the trading week, the USDCHF price moved higher for the 4th day in 5. In the process, the pair moved up to test the higher 100 day MA at 0.96873. The price did extend above that MA line briefly, and into a swing area between 0.9686 and 0.9707, but found seller at 0.96947. The price rotated back lower.
What now?
The falling 200 hour MA was broken earlier today and that was a catalyst to the move higher. That MA is lower now at 0.9634. The rising 100 hour MA is at 0.96244. The low in the North American session reached 0.9644 so far. The close on Friday was near that level.
Getting back into negative territory on the day and below the 200 and 100 hour MAs would tilt the bias more to the downside again. Conversely, holding - traders can lean with limited risk - would give the buyers above the 200 hour MA, some hope for more USDCHF buying.
In focuse this week fundamentally, is the SNB meets this week (on Thursday) and are expected to raise rates by 75 basis points. Commerzbank economist said:
“The SNB will hike by 75 bps to 0.50%. By doing that the SNB does not take any major risks as the market is pricing in this step so the effect on the franc is likely to be limited. If, however, the SNB seems surprisingly moderate in its statement as far as future rate hikes are concerned that might put downside pressure on CHF. In my view that would not be in the SNB’s interest as it also wants to intervene against a weak franc.”
“It is likely to keep the ‘restrictive door’ wide open for now, which should support the franc in principle.”
“I do not want to exclude a 100 bps step completely as the SNB might try to rely more on frontloading to move the key rate away from zero more quickly – the SNB can always be relied upon for a surprise. A step of this magnitude would no doubt be positive for CHF.”
A more positive CHF would have the price trading back below the 100/200 hour MAs and looking toward the 0.9537 to 0.9553 ahead of the rising 200 day MA at 0.94847.
Of course the US Fed is also in play on Wednesday where they are expecting to raise rates by an equal 75 basis points. So the battle of the central banks, may keep the USDCHF grounded. Watch the levels for trading clues.
