Fundamental Overview
The USD remains on the backfoot as the US data continues to point to resilient growth with falling inflation. This week, we got a good US Retail Sales report suggesting that the stories of deteriorating consumer spending have been exaggerated. Overall, this should continue to support the soft-landing narrative and be positive for the risk sentiment.
The CHF, on the other hand, keeps on gaining against the US Dollar mainly because of the positive sentiment as the US data continues to support at least two rate cuts from the Fed without sending recessionary signals. Yesterday’s general greenback weakness might have also been due to the drop in the USDJPY pair as flows there could have spilled over other markets.
On the monetary policy front, the recent Swiss CPI report missed expectations once again, so there’s no need for the central bank to worry about inflation. The probabilities for another rate cut in September are currently at 73%.
USDCHF Technical Analysis – Daily Timeframe
On the daily chart, we can see that USDCHF fell below the 0.8885 support yesterday wiping out completely the gains from the SNB rate decision. This switched the bias to the downside as the sellers are now more in control. We might see a bounce here around the previous low at 0.8828 but the sellers will look for a rally to sell into and target a drop into the 0.8730 level next. The buyers, on the other hand, will want to see the price rising back above the 0.8885 level to regain some control and position for new highs.
USDCHF Technical Analysis – 4 hour Timeframe
On the 4 hour chart, we can see that we have a good resistance around the 0.8885 level where we can find the 50% Fibonacci retracement level for confluence. This is where we can expect the sellers to step in with a defined risk above the level to position for a drop into the 0.8730 level with a better risk to reward setup. The buyers, on the other hand, will want to see the price breaking higher to regain some control and target an extension to the minor trendline around the 0.8920 level.
USDCHF Technical Analysis – 1 hour Timeframe
On the 1 hour chart, we can see more clearly the bearish setup around the 0.8885 level. More aggressive sellers might pile in on a break below the recent low at 0.8820 but the risk to reward setup would be worse. The red lines define the average daily range for today.
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Today we get the latest US Jobless Claims figures.