Fundamental Overview
The USD continues to consolidate around the highs except against the commodity currencies where it extended into new highs. The US inflation data last week was once again a disappointment although the data that feeds into the Core PCE was overall benign as forecasters expect a 0.13% M/M increase.
Nonetheless, the Treasury yields continue to climb and are now back around the post-US election highs. There’s some understandable uneasiness in the bond market given the hot US data and the Fed continuing to cut into an accelerating economy.
On the CHF side, the SNB cut interest rates by 50 bps bringing the policy rate to 0.50% and dropped the language signalling further cuts in the coming quarters.
This suggests that the central bank will likely slow the pace of easing which is something that the market was already expecting with two 25 bps cuts priced in for next year.
SNB’s Chairman Schlegel was a bit more cautious on the negative rates policy but didn’t exclude it from their strategy if it’s needed to stop the appreciation in the Swiss Franc.
USDCHF Technical Analysis – Daily Timeframe
On the daily chart, we can see that USDCHF reversed the fall and rallied back above the major trendline leaving behind a fakeout. The buyers are back in control and will keep on targeting the 0.9050 level. The sellers, on the other hand, will want to see the price breaking below the trendline to start targeting new lows.
USDCHF Technical Analysis – 4 hour Timeframe
On the 4 hour chart, we can see that we have another minor upward trendline defining the current bullish momentum on this timeframe. The buyers will likely keep on leaning on it with a defined risk below it to position for new highs, while the sellers will look for a break lower to pile in for a chance to break below the major trendline and extend into new lows.
USDCHF Technical Analysis – 1 hour Timeframe
On the 1 hour chart, we can see that we have a minor counter-trendline defining the current pullback. More aggressive buyers will likely pile in on a break to target new highs, while the sellers should lean on it to keep targeting the break below the major trendline. The red lines define the average daily range for today.
Upcoming Catalysts
Today, we have the US Flash PMIs. Tomorrow, we get the US Retail Sales data. On Wednesday, we have the FOMC Policy Decision. On Thursday, we get the latest US Jobless Claims figures. On Friday, we conclude the week with the US PCE data.
