US:
- The Fed hiked by 25 bps as expected and kept everything unchanged at the last meeting.
- Fed Chair Powell reaffirmed their data dependency and kept all the options on the table.
- Inflation measures since then showed further disinflation.
- The labour market displayed signs of softening although it remains fairly tight.
- Overall, the economic data started to surprise to the downside lately.
- The Fed members are leaning more towards a pause rather than another rate hike.
- The market doesn’t expect the Fed to hike anymore.
Switzerland:
- The SNB raised interest rates by 25 bps as expected at the last meeting and communicated that additional rate hikes cannot be ruled out as it maintains the hawkish stance.
- The Switzerland CPI showed the inflation rate easing even more within the SNB 0-2% target band.
- The Unemployment Rate ticked higher a little.
- The Manufacturing PMI remained in strong contraction.
- The market expects the SNB to pause at the next meeting.
USDCHF Technical Analysis – Daily Timeframe
On the daily chart, we can see that USDCHF recently broke out of the key downward trendline and 0.8858 resistance. This has opened the door for much higher prices with the first strong level coming in at 0.9122. The trend is clearly bullish as the price has been printing higher highs and higher lows and the moving averages are crossed to the upside. The red 21 moving average continues to be a strong dynamic support with the buyers leaning on it to position for higher prices. In case we see another pullback into the moving average, we can expect the buyers leaning on it again.
USDCHF Technical Analysis – 4-hour Timeframe
On the 4-hour chart, we can see that USDCHF is trading within a rising channel and that it’s been diverging with the MACD for a long time. This is generally a sign of weakening momentum often followed by pullbacks or reversals. The price is now at the upper bound of the channel, so we might see a correction from here into the lower bound of the channel.
USDCHF Technical Analysis – 1-hour Timeframe
On the 1-hour chart, we can see that we have a meaningful trendline within the channel that is defining the current short-term uptrend. The sellers are likely to step in here with a defined risk above the channel to target a fall into the lower bound of the channel around the 0.88 handle. If the price breaks below the trendline, the sellers will pile in even more aggressively as that would give further confirmation for a bigger correction. The buyers, on the other hand, are likely to lean on the trendline where we have also the confluence with the Fibonacci retracement levels and the 4-hour red 21 moving average.
Upcoming Events
This week is a bit empty on the data front with just the US ISM Services PMI today and the US Jobless Claims tomorrow being the main highlights. The market pricing is unlikely to change unless the data comes in really hot in which case, we should see the US Dollar strengthening. On the other hand, weaker readings might just bring forward rate cuts expectations and weigh on the greenback in the short term.
