Fundamental Overview
After the strong push lower from last Friday when Fed Chair Powell delivered a more dovish than expected speech at the Jackson Hole Symposium, the USDCHF pair hasn’t moved much as the lack of catalysts this week kept the price action at bay.
The market is waiting for the key economic releases next week, and especially the NFP report, as that will likely decide whether the Fed is going to deliver a standard 25 bps cut or go for a more aggressive 50 bps cut in September.
Right now, it looks like the Fed is going to cut rates into a resilient economy, so one has to be mindful that we might eventually get an increase in economic activity that could lift long term yields.
That might not be the market’s focus at the moment because we will need a catalyst to change the narrative, but it’s something to keep an eye on. The focus right now is on the US labour market data as more weakening could not only trigger a more aggressive Fed easing but also bring back recessionary fears which should support the Swiss Franc.
On the other hand, SNB’s Jordan yesterday spoke at an event in Riehen and mentioned how the Swiss Franc strength makes life tougher for the Swiss industry. It sounds like the central bank President isn’t happy about the exchange rate. That’s something to keep an eye on as the SNB might intervene to weaken the CHF.
USDCHF Technical Analysis – Daily Timeframe
On the daily chart, we can see that USDCHF broke the August low this week and bounced around the 0.84 handle. The buyers will want to see the price breaking above the 0.8555 level to start targeting the 0.8730 level next. The sellers, on the other hand, will likely step in around the 0.8555 level to position for a drop into the 0.8333 level.
USDCHF Technical Analysis – 4 hour Timeframe
On the 4 hour chart, we can see that from a risk management perspective, the sellers will have a better risk to reward around the 0.8555 level where they will also find the 38.2% Fibonacci retracement level for confluence. The buyers, on the other hand, will want to see the price breaking higher to increase the bullish bets into the major trendline around the 0.8650 level.
USDCHF Technical Analysis – 1 hour Timeframe
On the 1 hour chart, we can see that the price is currently trading in a tight range between the 0.8493 resistance and the 0.8452 support. The buyers will want to see the price breaking higher to increase the bullish bets into the 0.8555 level next. The sellers, on the other hand, will want to see the price breaking lower to position for a drop into new lows. The red lines define the average daily range for today.
Upcoming Catalysts
Today we conclude the week with the US PCE report.
