Fundamental Overview
The US Dollar is now lower across the board as the market erased most of the greenback’s gains following Trump’s victory. This has been a puzzling reaction as Trump’s policies are likely to spur growth and potentially end the Fed’s easing cycle earlier than expected.
We can argue that the market was already positioned for a Trump’s victory as we saw the greenback rallying for a couple of weeks leading into the US election. So, this might just be a “sell the fact” reaction and the market might now need more to keep bidding the USD.
Another possible explanation is that the market is more focused on global growth now and that’s generally bearish for the greenback. We saw something similar in 2016 when the USD rallied strongly once Trump got elected but after a couple of months, it went into a 2-year long downtrend.
The Fed for now remains neutral and on track to keep cutting rates. Yesterday, they cut by 25 bps as expected and given the overall neutral message, the market expects another 25 bps cut in December. Strong data from now until the December meeting though could change their plans for 2025.
We have the US CPI report next week and that’s going to be a test. If the US Dollar sells off on hot data, then the market might be indeed focusing on global growth rather than the potential for an earlier pause in the Fed’s easing cycle.
USDCHF Technical Analysis – Daily Timeframe
On the daily chart, we can see that USDCHF couldn’t extend the rally above the key resistance zone around the 0.8730 level. We now have an upward trendline defining the bullish momentum. We can expect the buyers to lean on it to position for a rally into new highs, while the sellers will look for a break lower to increase the bearish bets into new lows.
USDCHF Technical Analysis – 4 hour Timeframe
On the 4 hour chart, we can see that we have a minor support around the 0.87 handle. The buyers will likely step in there with a defined risk below it to target new highs, while the sellers will look for a break lower to increase the bearish bets into the major trendline.
USDCHF Technical Analysis – 1 hour Timeframe
On the 1 hour chart, there’s not much to add here as the buyers will look for a bounce around the 0.87 handle, while the sellers will look for a break. The red lines define the average daily range for today.
Upcoming Catalysts
Today we conclude the week with the University of Michigan Consumer Sentiment report.
