Fundamental Overview
The USD has been overall rangebound in the last couple of weeks. The last week’s strength might have been influenced more by quarter-end flows rather than something fundamental as the economic data didn’t change interest rates expectations. Nonetheless, all else being equal, the data should continue to support the risk sentiment amid a pickup in growth without inflationary pressures and that could weigh on the US Dollar eventually.
The CHF, on the other hand, weakened a lot as the SNB cut rates by 25 bps bringing the policy rate to 1.25%. Now, the rate cut wasn’t really a surprise as the market was already pricing a 68% chance going into the event. What added to the Swiss Franc weakness was the central bank lowering its inflation forecasts.
The only thing bullish for the CHF was the line saying that the SNB “will be ready to intervene in FX market if needed and as necessary”, but we already knew that from the Chairman Jordan’s comments, and they won’t do it unless inflation surprises to the upside or they see risks of inflation overshooting their projections.
USDCHF Technical Analysis – Daily Timeframe
On the daily chart, we can see that USDCHF rallied strongly following the SNB decision and the price is not near the key trendline around the 0.9050 level. This is where we can expect the sellers to step in with a defined risk above the trendline 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 the highs.
USDCHF Technical Analysis – 4 hour Timeframe
On the 4 hour chart, we can see that we have a minor trendline now defining the current bullish momentum. If we get a pullback from the major trendline, we can expect the buyers to lean on the minor trendline with a defined risk below the 0.90 handle to position for a break above the major trendline with a better risk to reward setup.
The sellers, on the other hand, will want to see the price breaking below the minor trendline and the 0.90 handle to turn the bias more bearish and increase the bets into new lows.
USDCHF Technical Analysis – 1 hour Timeframe
On the 1 hour chart, we can see that we have also the 50% Fibonacci retracement level around the minor trendline. This should technically strengthen the support zone and give the buyers a good level where to lean on.
The sellers will need the price to fall below the 0.90 handle to invalidate the bullish setup and increase the bearish bets into new lows. The red lines define the average daily range for today.
Upcoming Catalysts
Today we have the US Job Openings and Fed Chair Powell speaking. Tomorrow, we get the US ADP, the US Jobless Claims, the US ISM Services PMI and the FOMC Meeting Minutes. On Thursday we will get the latest Swiss CPI figures and it’s also going to be a US Holiday for Independence Day. Finally, on Friday, we conclude the week with the US NFP report.
