USD

  • The Fed left interest rates unchanged as expected at the last meeting with a shift in the statement that indicated the end of the tightening cycle.
  • The Summary of Economic Projections showed a downward revision to Growth and Core PCE in 2024 while the Unemployment Rate was left unchanged. Moreover, the Dot Plot was revised to show three rate cuts in 2024 compared to just two in the last projection.
  • Fed Chair Powell didn't push back against the strong dovish pricing and even said that they are focused on not making the mistake of holding rates high for too long.
  • The latest US CPI slightly beat expectations but analysts expect the Core PCE to print at 0.2% M/M again following the CPI data.
  • The US PPI missed expectations across the board supporting the disinflationary impulse.
  • The labour market continues to soften although Initial Claims keep on hovering around cycle lows while Continuing Claims are ranging at a higher level.
  • The latest ISM Manufacturing PMI beat expectations, while the ISM Services PMI missed by a big margin.
  • The Fed members recently have been pushing back on the aggressive rate cuts expectations.
  • The market expects the Fed to start cutting rates in March.

CHF

  • The SNB kept interest rates unchanged at 1.75% at the last meeting stating that they will adjust policy if necessary to ensure that inflation remains in the target range.
  • The SNB Governor Jordan said that the monetary conditions are appropriate and that they do not forecast any further tightening.
  • The latest Switzerland CPI beat expectations although the rate remains within the SNB’s target band.
  • The Unemployment Rate remains steady at cycle lows.
  • The Manufacturing PMI rose slightly although it remains in contraction, while the Services PMI hold on in expansion.
  • The market expects the SNB to start cutting rates in Q2.

USDCHF Technical Analysis – Daily Timeframe

USDCHF Technical Analysis
USDCHF Daily

On the daily chart, we can see that USDCHF broke above the key trendline and extended the rally beyond the 0.86 handle. The bias has now turned bullish with the price printing higher highs and higher lows and the moving averages being crossed to the upside. The buyers will look for dip-buying opportunities and target the 0.88 handle. The sellers, on the other hand, will want to see the momentum changing before getting more conviction for a change in the trend.

USDCHF Technical Analysis – 4-hour Timeframe

USDCHF Technical Analysis
USDCHF 4 hour

On the 4-hour chart, we can see that from a risk management perspective, the buyers will have a much better risk to reward setup around the upward trendline where we can also find the confluence with the 21 moving average and the 50% Fibonacci retracement level. The sellers, on the other hand, will want to see the price breaking lower to invalidate the bullish setup and position for a drop into new lows.

USDCHF Technical Analysis – 1-hour Timeframe

USDCHF Technical Analysis
USDCHF 1 hour

On the 1-hour chart, we can see that we have another minor trendline that is defining the current uptrend on this timeframe. We can notice that the price is starting to diverge with the MACD, which is generally a sign of weakening momentum often followed by pullbacks or reversals. In this case, the buyers should lean on the trendline and the red 21 moving average to keep bidding up the pair. The sellers, on the other hand, will want to see the price breaking lower to pile in and target a pullback into the major upward trendline around the 0.0.8550 level.

Upcoming Events

Today, we will get the US Retail Sales and Industrial Production data, while tomorrow we will see the latest US Jobless Claims figures. On Friday, we conclude the week with the University of Michigan Consumer Sentiment survey.