Fundamental Overview

The USD last week got a boost from the strong US Consumer Confidence data which triggered an aggressive rise in long term Treasury yields. The report however just showed that the labour market remains resilient which is good news for growth and not necessarily bad news for inflation. Eventually, both the Treasury yields and the greenback gave back the gains as it became clearer that the price action got impacted more by the month-end flows rather than a fundamental driver.

The CHF, on the other hand, got a boost from SNB’s Jordan comments where he said that if upward risks to Swiss inflation were to materialise, these would most likely be associated with a weaker franc, which could be counteracted by selling foreign exchange reserves (buying CHF). On top of that, we got a selloff in the US Dollar across the board as the risk-on sentiment returned.

USDCHF Technical Analysis – Daily Timeframe

USDCHF Technical Analysis

On the daily chart, we can see that USDCHF sold off all the way back to the key support around the 0.90 handle. This is where we can expect the buyers to step in with a defined risk below the support to position for a rally into the 0.9250 level. The sellers, on the other hand, will want to see the price breaking lower to invalidate the bullish bias and increase the bearish bets into the 0.88 handle.

USDCHF Technical Analysis – 4 hour Timeframe

USDCHF Technical Analysis
USDCHF 4 hour

On the 4 hour chart, we can see that we have an important zone around the 0.91 handle where the price reacted to several times in the past few weeks. If the pair gets there, we can expect the sellers to lean on that resistance zone with a defined risk above it to position for a break below the 0.90 support with a better risk to reward setup. The buyers, on the other hand, will want to see the price breaking higher to increase the bullish bets into the 0.9250 level.

USDCHF Technical Analysis – 1 hour Timeframe

USDCHF Technical Analysis
USDCHF 1 hour

On the 1 hour chart, we can see that we have the upper limit of the average daily range right around the most recent swing high level at 0.9070. This should strengthen the case for a strong resistance around the 0.9070 and 0.9100 price region ahead of the Swiss CPI release and give the sellers a good point where to lean on. The buyers will need to break above that zone to turn the bias around and extend the rally into new highs.

Upcoming Catalysts

Today we have the US ISM Manufacturing PMI. Tomorrow, we get the Swiss CPI and the US Job Openings data. On Wednesday, we have the US ADP and the US ISM Services PMI. On Thursday, we get the latest US Jobless Claims figures, while on Friday we conclude the week with the US NFP report.

A downside surprise in the Swiss CPI should see the market getting a bit more confident for another rate cut in June and might weigh on the currency in the short-term. On the other hand, an upside surprise might give the Swiss Franc a bigger boost as the market should price out both the chances of a rate cut in June and expect the central bank to prop up the currency.