Fundamental Overview
The USD has been stronger since last Friday following the US NFP report where the data surprised with solid jobs and wage growth. There were also negatives like the uptick in the unemployment rate, but all in all, we can say that it was a good report.
The data triggered a hawkish repricing in interest rates expectations with the market now expecting once again just one cut by the end of the year. It’s not a big deal in the bigger picture, but for now the sentiment is bullish for the greenback and we will likely need a catalyst to change it again.
The CHF, on the other hand, got a boost a couple of weeks ago from SNB’s Jordan comments where he said that if upward risks to Swiss inflation were to materialise, these would most likely be associated with a weaker franc, which could be counteracted by selling foreign exchange reserves (buying CHF).
On top of that, the greenback remained on the backfoot across the board amid the risk-on sentiment. The NFP changed that sentiment though and today’s US CPI might either reinforce it or turn it around again.
USDCHF Technical Analysis – Daily Timeframe
On the daily chart, we can see that USDCHF sold off all the way to the 0.8885 level where we had also the 38.2% Fibonacci retracement level of the entire rally from the cycle low at 0.8333 before bouncing back following the US NFP release.
We can expect the sellers to step in around the support-turned-resistance around the 0.90 handle to position for a drop into new lows. The buyers, on the other hand, will want to see the price breaking higher to increase the bullish bets into new highs.
USDCHF Technical Analysis – 4 hour Timeframe
On the 4 hour chart, we can see that we have also the 38.2% Fibonacci retracement level for confluence around the 0.90 resistance.
The price action today will depend on the US CPI report. In fact, if we get hot figures, we can expect the pair to rally further and likely reach the trendline around the 0.91 handle. On the other hand, soft data will likely lead to a drop with high chances of seeing new lows.
USDCHF Technical Analysis – 1 hour Timeframe
On the 1 hour chart, we can see that we have a good support around the 0.8950 level which is defining the current consolidation. The red lines show the average daily range for today but do note that the price can extend beyond them when there are strong catalysts like today’s US CPI report, so be careful.
Upcoming Catalysts
Today we get the US CPI data and the FOMC rate decision. Tomorrow, we have the US PPI and the latest US Jobless Claims figures. On Friday, we conclude the week with the University of Michigan Consumer Sentiment survey.
