Fundamental Overview
The USDCHF pair eventually erased the entire drop following the more dovish than expected Powell’s speech at the Jackson Hole Symposium. The focus is now on the key data this week with the ISM Manufacturing PMI and the NFP reports in the spotlight.
The market is waiting for the key economic releases this week, and especially the NFP report, as that will likely decide whether the Fed is going to deliver a standard 25 bps cut or go for a more aggressive 50 bps cut in the upcoming meeting.
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 that could lift long term yields.
That might not be the market’s focus at the moment but it’s something to keep an eye on. The focus right now is on the US labour market data as more weakening could not only trigger a more aggressive Fed easing but also bring back recessionary fears which should support the CHF.
Therefore, besides the headline ISM number today, watch also the employment sub-index as a drop into new lows could spook the markets while an improvement could lead to a positive sentiment.
The Swiss CPI today came out a touch softer than expected although the Core measure remained unchanged. That diminished the probabilities for a 50 bps cut by the SNB at the upcoming meeting.
USDCHF Technical Analysis – Daily Timeframe
On the daily chart, we can see that USDCHF is approaching the 0.8555 level. That’s 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 0.8730 level next.
USDCHF Technical Analysis – 4 hour Timeframe
On the 4 hour chart, we can see that from a risk management perspective, the sellers will have a better risk to reward setup around the 0.8630 level where they will find the confluence of the trendline and the 61.8% Fibonacci retracement level. The buyers, on the other hand, will want to see the price breaking higher to increase the bullish bets into the 0.8730 level.
USDCHF Technical Analysis – 1 hour Timeframe
On the 1 hour chart, we can see that we have a minor upward trendline defining the current bullish momentum. The buyers will likely keep on leaning on it to position for new highs, while the sellers will want to see the price breaking lower to increase the bearish bets into the 0.8333 level. The red lines define the average daily range for today.
Upcoming Catalysts
Today we have the US ISM Manufacturing PMI. Tomorrow, we have the US Job Openings. On Thursday, we get the US Jobless Claims figures and the ISM Services PMI. Finally, on Friday, we conclude the week with the US NFP report.
