USD

  • The Fed left interest rates unchanged as expected at the last meeting with basically no change to the statement. The Dot Plot still showed three rate cuts for 2024 and the economic projections were upgraded with growth and inflation higher and the unemployment rate lower.
  • Fed Chair Powell maintained a neutral stance as he said that it was premature to react to the recent inflation data given possible bumps on the way to their 2% target.
  • The US CPI and the US PPI beat expectations for the second consecutive month.
  • The US NFP beat expectations across the board although the average hourly earnings came in line with forecasts.
  • The US ISM Manufacturing PMI beat expectations by a big margin with the prices component continuing to increase, while the US ISM Services PMI missed with the price index dropping to the lowest level in 4 years.
  • There’s now basically a 50/50 chance of a rate cut in June.

CHF

  • The SNB cut interest rates by 25 bps bringing the policy rate to 1.50% vs. 1.75% prior.
  • The latest Switzerland CPI missed expectations by a big margin.
  • The Unemployment Rate remains steady at cycle lows.
  • The Manufacturing PMI improved further while the Services PMI saw a big drop. Both the measures are in contraction.
  • The market expects the SNB to cut rates again in June.

USDCHF Technical Analysis – Daily Timeframe

USDCHF Technical Analysis
USDCHF Daily

On the daily chart, we can see that USDCHF has been consolidating near the key resistance at 0.9112. From a risk management perspective, the buyers will have a much better risk to reward setup around the trendline where they will also find the red 21 moving average and the 38.2% Fibonacci retracement level for confluence. The sellers, on the other hand, will want to see the price breaking lower to invalidate the bullish setup and increase the bearish bets into new lows with the 0.8728 level as the first target.

USDCHF Technical Analysis – 4-hour Timeframe

USDCHF Technical Analysis
USDCHF 4 hour

On the 4-hour chart, we can see that the price has been diverging with the MACD as it approached the key resistance at 0.9112. This is generally a sign of weakening momentum often followed by pullbacks or reversals. In this case, the target for the pullback would stand right around the trendline and the 38.2% Fibonacci retracement level, but the price will first need to break below the 0.90 handle to confirm it.

USDCHF Technical Analysis – 1-hour Timeframe

USDCHF Technical Analysis
USDCHF 1 hour

On the 1-hour chart, we can see that the price has been consolidating between the 0.90 handle and the counter-trendline around the 0.9070 level. The buyers will want to see the price breaking higher to position for a rally into new highs, while the sellers will want to see the price breaking lower to target new lows. Watch out for today’s US CPI release as hot figures should trigger a strong rally, while cold data is likely to cause a selloff into new lows.

Upcoming Events

Today we get the US CPI report and the FOMC Minutes. Tomorrow, we will have the US PPI and the latest US Jobless Claims figures. On Friday, we conclude the week with the University of Michigan Consumer Sentiment Survey.