Fundamental Overview
Yesterday, we got the US CPI report and, although as expected it didn’t have the same large impact as it used to, the core m/m figure surprised to the upside. The shelter component re-accelerated and that’s something to keep an eye on given the imminent rate cut cycle.
The data triggered a repricing in interest rates expectations with the market now seeing just a 13% probability of a 50 bps cut at the upcoming FOMC meeting and less easing further out the curve.
For the SNB, the market expects the central bank to cut by 25 bps at the upcoming meeting with a total of 55 bps of easing seen by year-end.
Right now, it looks like the Fed is going to cut rates into a resilient economy, so one has to be mindful that we might eventually get an increase in economic activity and in long term yields which should boost the US Dollar.
USDCHF Technical Analysis – Daily Timeframe
On the daily chart, we can see that USDCHF is now testing the key 0.8555 level. This is where we can expect the sellers to step in with a defined risk above the level to position for a drop into the 0.8333 level. The buyers, on the other hand, will want to see the price breaking higher to increase the bullish bets into the 0.8731 level next.
USDCHF Technical Analysis – 4 hour Timeframe
On the 4 hour chart, we can see that we have a strong resistance around the 0.8555 level where we can find the confluence of the trendline and the previous swing high level. This is going to be a tough nut to crack for the buyers but if they manage to do so, we can expect the bullish momentum to increase and the rally to extend to 0.8731 level.
USDCHF Technical Analysis – 1 hour Timeframe
On the 1 hour chart, we can see that we have a minor support zone around the 0.8515 level. If we get a pullback from the 0.8555 level, we can expect the buyers to step in around the support to position for a break above the trendline.
The sellers, on the other hand, will want to see the price breaking lower to increase the bearish bets into the upward trendline around the 0.8450 level. The red lines define the average daily range for today.
Upcoming Catalysts
Today we get the latest US Jobless Claims figures and the US PPI data. Tomorrow, we conclude the week with the University of Michigan Consumer Sentiment report.
