Fundamental Overview
The USD rallied across the board last Friday following the hot US NFP report. The market priced out all the aggressive expectations and it’s now finally in line with the Fed’s projections.
The focus remains on the economic data. If we keep getting strong US data, then USDCHF will likely continue to drift higher. Conversely, if the data weakens significantly, the market will price back in the aggressive cut and drive USDCHF lower.
For the CHF, the Swiss CPI last week surprised once again to the downside. As a reminder, the SNB cut rates by 25 bps at the last policy decision and mentioned that it’s prepared to intervene in currency markets as necessary. Moreover, the new inflation forecasts were revised significantly lower signalling more rate cuts to come.
USDCHF Technical Analysis – Daily Timeframe
On the daily chart, we can see that USDCHF finally broke out of the range following the much better than expected NFP report. The buyers piled in to position for a rally into the 0.8730 resistance next where we can also find the major trendline for confluence. The sellers, on the other hand, will want to see the price falling back below the 0.8555 level to invalidate the breakout and position for a drop into the cycle low at 0.8333.
USDCHF Technical Analysis – 4 hour Timeframe
On the 4 hour chart, we can see that we now have an upward trendline defining the current bullish momentum. If the price were to pull back, the buyers will likely lean on the trendline to increase the bullish bets into new highs. The sellers, on the other hand, will want to see the price breaking below the trendline and the 0.8555 level to pile in for a drop into new lows.
USDCHF Technical Analysis – 1 hour Timeframe
On the 1 hour chart, we can see that the consolidation is forming what could end up being a bullish flag pattern in case the price breaks above the counter-trendline. We can expect the buyers to pile in on a break above the trendline, while the sellers will continue to lean on it to position for the pullback into the 0.8555 level. The red lines define the average daily range for today.
Upcoming Catalysts
This week the calendar is a bit empty on the data front. The main events are all scheduled for the latter part of the week. On Thursday, we have the US CPI and the US Jobless Claims. On Friday, we conclude with the US PPI and the University of Michigan Consumer Sentiment report.
