Fundamental Overview
The USD got a bit of a boost yesterday as Fed Chair Powell reiterated that 50 bps of easing by year end remains the base case. The market’s probability for the Fed to cut by 50 bps in November fell from 51% to 40%.
The focus remains on the economic data. If we start to see an improvement, then Treasury yields will likely rise and drive USDCHF higher. Conversely, if the data weakens significantly, the market will start to worry about a recession and take USDCHF lower.
For the CHF, the SNB last week cut rates by 25 bps bringing the policy rate to 1.00%. The central bank mentioned that it’s prepared to intervene in currency markets as necessary and the new inflation forecasts were revised significantly lower signalling more rate cuts to follow.
USDCHF Technical Analysis – Daily Timeframe
On the daily chart, we can see that USDCHF remains stuck in the range between the 0.8555 resistance and the 0.8400 support. The market participants will likely keep on playing the range by buying at support and selling at resistance until we get a breakout.
USDCHF Technical Analysis – 4 hour Timeframe
On the 4 hour chart, we can see more clearly the rangebound price action. There’s not much to add here as we will need to wait for a major catalyst or a breakout to see a more sustained trend. The US ISM Manufacturing PMI and the US NFP this week will likely be key.
USDCHF Technical Analysis – 1 hour Timeframe
On the 1 hour chart, we can see that we have a minor upward trendline defining the current bullish momentum on this timeframe. The buyers will likely keep on leaning on the trendline to position for further upside, while the sellers will want to see the price breaking lower to pile in for a drop back into the support. The red lines define the average daily range for today.
Upcoming Catalysts
Today we get the US ISM Manufacturing PMI and the US Job Openings data. Tomorrow, we have the US ADP report. On Thursday, we get the Swiss CPI, the US Jobless Claims and the US ISM Services PMI. Finally, on Friday, we conclude the week with the US NFP report.