Fundamental Overview
The main culprit for the US Dollar strength lately has been the rally in long term Treasury yields. The yield curve has been bear-flattening which is what you would expect with higher growth and potentially higher inflation expectations.
There’s a good argument that the markets have been already positioning for a Trump’s victory which is expected to strengthen the higher growth and less rate cuts expectations.
As previously mentioned, this is the trend for now and it’s generally a bad idea to fight such trends without a strong catalyst. The US Dollar will likely remain supported unless Harris wins the US elections and we get a correction in Treasury yields.
USDCHF Technical Analysis – Daily Timeframe
On the daily chart, we can see that USDCHF is approaching a key resistance zone around the 0.8730 level where we can also find the trendline for confluence.
That’s where we can expect the sellers to step in with a defined risk above the trendline to position for a drop into the 0.8333 level. The buyers, on the other hand, will look for a break higher to increase the bullish bets into the 0.89 handle next.
USDCHF Technical Analysis – 4 hour Timeframe
On the 4 hour chart, we can see that that the price has been making almost textbooks higher highs and higher lows with the price retesting the previous resistance turned support before making a new high. Right now, the price is testing the 0.8668 level.
The buyers will want to see the price breaking higher to extend the rally into the 0.87 handle, while the sellers will look for a break below the 0.8641 level to target a drop into the 0.86 handle next.
USDCHF Technical Analysis – 1 hour Timeframe
On the 1 hour chart, we can see that we have a very noisy price action between the 0.8668 and 0.8641 levels. We will likely need a breakout to see a more sustained trend but for now the market participants might keep on playing the range by buying at support and selling at resistance. The red lines define the average daily range for today.
Upcoming Catalysts
Today we have the US Job Openings and the US Consumer Confidence report. Tomorrow, we get the US ADP and the US GDP. On Thursday, we have the US PCE, the US Jobless Claims and the US Employment Cost Index data. Finally, on Friday, we conclude the week with the Swiss CPI, the US NFP and the US ISM Manufacturing PMI.
