Last week, the Fed hiked by 25 bps as widely expected and left everything unchanged. Fed Chair Powell in the press conference just reaffirmed their data dependency and kept all the options on the table. The economic data since the FOMC meeting has been supporting the soft-landing narrative as the labour market data remained strong and the inflation data missed expectations.
On the other hand, the SNB raised interest rates by 25 bps as expected at the last meeting and communicated that additional rate hikes cannot be ruled out as it maintains the hawkish stance. The Swiss CPI today showed the inflation rate easing even more within the SNB 0-2% target band and should translate into a pause for the SNB at the next meeting, barring any upside surprise before the meeting.
USDCHF Technical Analysis – Daily Timeframe
On the daily chart, we can see that since the double bottom on the 0.8555 level, USDCHF started a strong rally towards the 0.8858 resistance. We had already 5 consecutive positive days and it looks like we will see more upside as the US data remains strong and the crowded short USD positions get unwound. The moving averages have crossed to the upside which is another bullish signal for the pair. The target for the buyers should be the downward trendline where we can also find the 0.8858 support turned resistance and the 50% Fibonacci retracement level.
USDCHF Technical Analysis – 4-hour Timeframe
On the 4-hour chart, we can see that the price is trending upwards within a rising channel and the red 21 moving average acts as dynamic support. If we get a pullback, we should see the buyers stepping in at the moving average and the lower bound of the channel to position for further upside. The sellers, on the other hand, will want to see the price breaking lower to give them more conviction and pile in for another low.
USDCHF Technical Analysis – 1-hour Timeframe
On the 1-hour chart, we can see that price action within the channel has been diverging with the MACD. This is generally a sign of weakening momentum often followed by pullbacks or reversals. In this case, we may see a pullback into the 0.8761 resistance turned support where we can also find the 50% Fibonacci retracement level. This is where the buyers are likely to pile in with a defined risk below the channel and target the 0.8858 resistance.
Upcoming Events
Today the market will be focused on the US Jobless Claims and ISM Services PMI data, while tomorrow all eyes will be on the US NFP report. Strong data should support the US Dollar, while weak readings should weigh on the greenback in the short-term.
