Fundamental Overview
The USD rallied across the board last Friday following the hot US NFP report. The market priced out all the aggressive rate cuts expectations and it’s now finally in line with the Fed’s projections.
This week, the greenback extended the gains as the market started to price in some chances of a pause in November. The focus remains on the economic data.
Today we get the US CPI report. We will likely need a hot report to see some more upside in the pair, while a miss could see the pair falling on the market paring back the hawkish expectations.
For the CHF, the Swiss CPI recently surprised once again to the downside. As a reminder, the SNB cut rates by 25 bps at the last policy decision and mentioned that it’s prepared to intervene in currency markets as necessary.
Moreover, the new inflation forecasts were revised significantly lower signalling more rate cuts to come. The market is pricing a 14% probability for a 50 bps cut in December.
USDCHF Technical Analysis – Daily Timeframe
On the daily chart, we can see that USDCHF pulled back to retest the previous resistance now turned support around the 0.8550 level and rallied back to test the recent highs. The buyers will want to see the price breaking higher on a hot CPI to increase the bullish bets into the 0.8730 level next. The sellers, on the other hand, will want to see a soft CPI and a drop back below the 0.8550 support to increase the bearish bets into the 0.8333 level next.
USDCHF Technical Analysis – 4 hour Timeframe
On the 4 hour chart, we can see that we have an upward trendline defining the current bullish momentum. The buyers will likely keep on leaning on it to position for a break above the resistance at 0.8607. The sellers, on the other hand, will want to see the price breaking lower to pile in for a drop into the 0.8550 support and beyond.
USDCHF Technical Analysis – 1 hour Timeframe
On the 1 hour chart, we can see more clearly the recent price action. We can see that we have a nice support zone around the 0.8580 level where we can find the confluence of the trendline and the previous swing high level. All eyes are now on the US CPI report as it will likely decide the trend for the next weeks. The red lines define the average daily range for today.
Upcoming Catalysts
Today we have the US CPI report and the US Jobless Claims figures. Tomorrow, we conclude with the US PPI and the University of Michigan Consumer Sentiment report.