The USD weakened across the board last week due to a more dovish than expected FOMC decision where the Fed decided to signal a bigger QT taper beginning in June and the Fed Chair Powell pushed back repeatedly against rate hike expectations. Moreover, the data on Friday showed that the Fed might indeed just keep rates higher for longer as job and wage growth soften.
On the other hand, the CHF appreciated substantially following the higher than expected Swiss CPI figures last Thursday. The market paired back a little the very dovish pricing for the SNB and now sees just a 60% chance of a rate cut in June. Overall, this shouldn't change much for the SNB as they have already projected in March that CPI would average 1.4% in Q2, so that's not really a surprise for them.
USDCHF Technical Analysis - Daily Timeframe
On the daily chart, we can see that USDCHF got rejected from the 0.92 handle and dropped all the way down to the key 0.90 handle helped by the more dovish than expected Fed and the higher than expected Swiss inflation figures. We can notice that the pair hasn't been able to break below the 0.90 level as the buyers kept on buying the dips. This makes it a key support going forward as a break to the downside might trigger a bigger selloff with the buyers folding and the sellers piling in more aggressively.
USDCHF Technical Analysis - 1 hour Timeframe
On the 1 hour chart, we can see that from a risk management perspective, the sellers will have a much better risk to reward setup around the 0.91 handle where they will also find the previous support now turned resistance and the 38.2% Fibonacci retracement level for confluence. The buyers, on the other hand, will want to see the price breaking higher to invalidate the bearish setup and position for a rally back into the highs.
Upcoming Catalysts
This week is pretty bare on the data front with just the US Jobless Claims on Thursday and the University of Michigan Consumer Sentiment survey on Friday being the only notable releases. It’s unlikely that they will change the market’s expectations that much, so the price action might remain tentative heading into the US CPI next week.
