Fundamental Overview
The USD continues to be backed by good economic data as we have also seen recently from the US PMIs last Friday and the US Consumer Confidence report this week. Although such data keeps the interest rates expectations stable around two cuts by the end of the year, it should also support the risk sentiment amid a pickup in growth. This could be a headwind for the greenback.
The CHF, on the other hand, weakened after the SNB cut interest rates by 25 bps to 1.25%. The market was pricing a 68% chance of a cut going into the decision, so it wasn’t really a surprise. The central bank also lowered its inflation forecasts though, so that added to the Swiss Franc weakness.
The only thing bullish for the CHF was the line saying that the SNB “will be ready to intervene in FX market if needed and as necessary”, although we already know that, and they won’t do it unless inflation surprises to the upside or they see risks of inflation overshooting their projections.
USDCHF Technical Analysis – Daily Timeframe
On the daily chart, we can see that USDCHF is approaching a key resistance around the 0.90 handle. That’s where we can expect the sellers to step in with a defined risk above the level to position for a drop into new lows. The buyers, on the other hand, will want to see the price breaking higher to increase the bullish bets into the highs.
USDCHF Technical Analysis – 4 hour Timeframe
On the 4 hour chart, we can see that we have also the 50% Fibonacci retracement level adding confluence to the resistance level. If we get an upside breakout, the next target should be the trendline around the 0.9050 level, which is also where we will likely find the sellers piling in for a drop into new lows.
USDCHF Technical Analysis – 1 hour Timeframe
On the 1 hour chart, we can see that if we were to get a pullback, the buyers will likely lean on the support zone around the 0. 8945 to position for a breakout with a better risk to reward setup. The sellers, on the other hand, will want to see the price breaking lower to increase the bearish bets into new lows. The red lines define the average daily range for today.
Upcoming Catalysts
Today we get the latest US Jobless Claims figures, while tomorrow we conclude the week with the US PCE report.
