US:
- The Fed hiked by 25 bps as expected and kept everything unchanged.
- Fed Chair Powell reaffirmed their data dependency and kept all the options on the table.
- The US economic data keeps on surprising to the upside, but inflation expectations and CPI readings continue to show disinflation with the last two Core CPI M/M figures coming in at 0.16%.
- At the moment, the market doesn’t expect another hike from the Fed, but the next NFP and CPI data will be crucial to confirm or change this view.
Switzerland:
- 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 Switzerland CPI showed the inflation rate easing even more within the SNB 0-2% target band.
- The Unemployment Rate ticked higher a little.
- Overall, it looks like the SNB can pause at the next meeting, barring any upside surprise before that date.
USDCHF Technical Analysis – Daily Timeframe
On the daily chart, we can see that USDCHF continues to pull back into the key trendline where we can also find the previous support now turned resistance and the 50% Fibonacci retracement level. This is where we can expect the sellers to pile in with a defined risk above the trendline to target a new low. The buyers, on the other hand, will want to see the price breaking higher to invalidate the bearish setup and start to position for more upside.
USDCHF Technical Analysis – 4-hour Timeframe
On the 4-hour chart, we can see that we’ve been diverging with the MACD for a while now and this is generally a sign of weakening momentum often followed by pullbacks or reversals. In this case, we saw several pullbacks along the way as the price approaches the key trendline. If the price breaks decisively the support level at 0.8761, we will have a higher probability of a reversal and the sellers are likely to jump onboard to extend the fall into new lows.
USDCHF Technical Analysis – 1-hour Timeframe
On the 1-hour chart, we can see that we have two strong areas now: the support at 0.8761 and the resistance at 0.8850. A break on either side should lead to a more sustained move as momentum traders are likely to pile in.
Upcoming Events
This week is pretty empty on the economic data side as we will only have the PMIs today and the US Jobless Claims tomorrow. Given the strong appreciation in the US Dollar seen in the past weeks, we can expect some USD weakness if the data misses expectations, and we will likely need much stronger than expected readings to see another sustained rally in the greenback. Remember also that this is the Jackson Hole Symposium week, so we will hear from many central bankers including Fed Chair Powell, who is set to speak on Friday.