Last week we heard from several central bank speakers. The prevailing sentiment remains the same: wait for further data to gauge the extent of future tightening needed. Although the majority of the FOMC members expect two additional rate hikes this year, they keep on highlighting that these decisions are subject to the data. The economic data we had up to now inclines them towards a rate hike, as the housing market data surprised to the upside, the US Jobless Claims remained stable, the US Services PMI beat expectations and yesterday the US Consumer Confidence jumped higher across the board.
The upcoming NFP and CPI reports will certainly have a significant role in shaping future expectations, but if we continue to see such positive data, it is likely that the Fed may indeed be forced to keep hiking beyond the market's current expectation of just one hike in July. Conversely, the SNB hiked again by 25 bps last week and even though they are much closer to their inflation target, they kept their hawkish tone as they want to avoid any second or third round effects.
USDCHF Technical Analysis – Daily Timeframe
On the daily chart, we can see that USDCHF couldn’t break above the 0.9122 resistance and since then fell almost all the way back to the 0.8858 support. The moving averages have again switched to the downside which is a signal that the trend has changed, and we may see new lows going forward. The near-term target should be the 0.8858 support, but a break below it would open the door for the 0.8765 low set in 2021.
USDCHF Technical Analysis – 4 hour Timeframe
On the 4 hour chart, we can see that the price has had a hard time trying to break above the 0.90 resistance and below the 0.89 support as well. This has created a range between the two levels and the price action became choppy. In such cases, it’s better to stay out of the market and wait for a clear breakout supported by a fundamental catalyst.
USDCHF Technical Analysis – 1 hour Timeframe
On the 1 hour chart, we can see more closely the range between 0.89 and 0.90. A break to the upside should see the buyers piling in targeting a rally into the 0.91 resistance. On the other hand, a break to the downside should see the sellers coming in to target a fall into the 0.8858 support, eventually looking for a breakout.
The data calendar for this week is relatively empty, with only the US Jobless Claims scheduled for Thursday and the US PCE for Friday. Nevertheless, we will hear from several central bank members throughout the week.