The US data continued to surprise to the upside since the last FOMC meeting and that lead the market to price in a more hawkish path for interest rates as the Fed members and especially Fed Chair Powell reiterated that they expect two or more rate hikes this year if the economy remains strong. A lot will depend of course on the next NFP and CPI reports, but as long as the data shows strength, the Fed should remain hawkish, and the USD should appreciate.
Conversely, the SNB raised interest rates by 25 bps as expected at the last meeting and communicated that additional rate hikes cannot be ruled out. The Swiss CPI data this week showed the inflation rate returning back within the SNB target band and should mean that the SNB can pause at the next meeting and see how things develop.
USDCHF Technical Analysis – Daily Timeframe
On the daily chart, we can see that the USDCHF started to range between the 0.89 and 0.90 levels although the bias remains bearish as the moving averages are crossed to the downside and the sellers are leaning on the red 21 moving average to target the 0.8858 support. It’s more about the data now as we are getting closer to the end of the tightening cycle for many central banks. Naturally, a break above the red 21 moving average should be a bad omen for the sellers as the buyers may get even more conviction for a rally into the 0.9122 resistance.
USDCHF Technical Analysis – 4 hour Timeframe
On the 4 hour chart, we can see more clearly the rangebound price action between the 0.89 and 0.90 levels. We can also notice that the price has been printing higher lows trying to break above the 0.90 resistance, so this should be a signal that the buyers have more strength and that we may see a breakout to the upside soon.
USDCHF Technical Analysis – 1 hour Timeframe
On the 1 hour chart, we can see that at the moment there’s really nothing to do here other than waiting for a breakout on either side. Rangebound markets chop out many traders because patience is key in such environments. A break to the upside should lead to a rally into the 0.9122 resistance, while a break to the downside, should open the door for a new lower low into the 0.86 handle.
Upcoming Events
In the next days we’ll get many top tier economic indicators like the US Jobless Claims and ISM Services PMI tomorrow and the main event of the week: the US NFP on Friday. Again, strong data should make the USD appreciate, while weak readings should weaken the greenback.