Fundamental Overview
The US Dollar came under renewed pressure recently following the surprisingly weak US consumer confidence report on Tuesday. The labour market data in the report softened a lot and it generally leads the unemployment rate.
The market responded by raising the probabilities for the Fed to cut by 50 bps in November to roughly 60%. The question now is whether this is just about the low hiring rate or something worse. We will have to wait for the NFP report next Friday.
The focus is now on the economic data. If we start to see an improvement, then Treasury yields will likely rise and drive USDCHF higher. Conversely, if the data weakens significantly, the market will start to worry about a recession and take USDCHF lower.
For the CHF, the SNB today cut rates by 25 bps bringing the policy rate to 1.00%. The central bank mentioned that it’s prepared to intervene in currency markets as necessary and the new inflation forecasts were revised significantly lower signalling more rate cuts to follow.
That was not enough for the market to lead to a weaker CHF as the currency is now positive on the day.
USDCHF Technical Analysis – Daily Timeframe
On the daily chart, we can see that USDCHF remains stuck in the range between the 0.8555 resistance and the 0.8400 support. The market participants will likely keep on playing the range by buying at support and selling at resistance until we get a breakout.
USDCHF Technical Analysis – 4 hour Timeframe
On the 4 hour chart, we can see more clearly the rangebound price action. There’s not much to add here as we will need to wait for a major catalyst or a breakout to see a more sustained trend.
USDCHF Technical Analysis – 1 hour Timeframe
On the 1 hour chart, we can see that the pair bounced strongly from the lows yesterday. If the price breaks below the most recent higher low at 0.8465, we might see the bearish momentum increasing as the sellers will look for a drop back into the support. The red lines define the average daily range for today.
Upcoming Catalysts
Today we get the latest US Jobless Claims figures, while tomorrow we conclude the week with the US PCE report.