The miss in the US NFP and CPI reports triggered a selloff in the US Dollar across the board. The market got increasingly confident that the July hike will be the last one for this cycle and what will follow are rate cuts sometime in early 2024. The recent beats in US economic data like the retail sales and the initial claims made the market to reconsider a bit its expectations and the USD came back to life as we started to see some profit taking ahead of the next week’s FOMC meeting.
On the other hand, the SNB raised interest rates by 25 bps as expected at the last meeting and communicated that additional rate hikes cannot be ruled out as it maintains the hawkish stance. The recent Swiss CPI data showed the inflation rate returning back within the SNB target band and should translate into a pause for the SNB at the next meeting, barring any upside surprise before the meeting.
USDCHF Technical Analysis – Daily Timeframe
On the daily chart, we can see that USDCHF was overstretched at some point as the price was too far from the blue 8 moving average. In such instances, we can generally see some consolidation or a pullback into the moving average to bring the market back into equilibrium. If the bearish bias remains intact, a good resistance for the sellers would be the 0.8761 level where we will also find the confluence with the red 21 moving average.
USDCHF Technical Analysis – 4-hour Timeframe
On the 4-hour chart, we can see that the bearish momentum was already waning as depicted by the divergence with the MACD. In fact, this is generally a sign of weakening momentum often followed by pullbacks or reversals. The price has recently broken above the most recent swing high at 0.8631 and then pulled back to retest it. We should see the buyers piling in here with a defined risk below the level and target the 0.8761 resistance.
USDCHF Technical Analysis – 1-hour Timeframe
On the 1-hour chart, we can see that we have also the confluence with the 38.2% Fibonacci retracement level near the 0.8631 level. This is a pretty strong support level and if the price breaks below it, we should see the sellers stepping in and target a new low.
