Fundamental
Overview
The USD rallied across the
board last Friday following the hot US
NFP report. The market priced out all the aggressive expectations and it’s
now finally in line with the Fed’s projections.
The focus remains on the
economic data. If we keep getting strong US data, then USDCHF will likely
continue to drift higher. Conversely, if the data weakens significantly, the
market will price back in the aggressive cut and drive USDCHF lower.
For the CHF, the Swiss
CPI last week surprised once again to the downside. As a reminder, the SNB
cut rates by 25 bps at the last policy decision and mentioned that it’s
prepared to intervene in currency markets as necessary. Moreover, the new
inflation forecasts were revised significantly lower signalling more rate cuts
to come.
USDCHF
Technical Analysis – Daily Timeframe
USDCHF Daily
On the daily chart, we can
see that USDCHF finally broke out of the range following the much better than
expected NFP report. The buyers piled in to position for a rally into the
0.8730 resistance
next where we can also find the major trendline
for confluence.
The sellers, on the other hand, will want to see the price falling back below
the 0.8555 level to invalidate the breakout and position for a drop into the
cycle low at 0.8333.
USDCHF Technical
Analysis – 4 hour Timeframe
USDCHF 4 hour
On the 4 hour chart, we can
see that we now have an upward trendline defining the current bullish momentum.
If the price were to pull back, the buyers will likely lean on the trendline to
increase the bullish bets into new highs. The sellers, on the other hand, will
want to see the price breaking below the trendline and the 0.8555 level to pile
in for a drop into new lows.
USDCHF Technical
Analysis – 1 hour Timeframe
USDCHF 1 hour
On the 1 hour chart, we can
see that the consolidation is forming what could end up being a bullish flag pattern
in case the price breaks above the counter-trendline. We can expect the buyers to
pile in on a break above the trendline, while the sellers will continue to lean
on it to position for the pullback into the 0.8555 level. The red lines define the
average daily range for today.
Upcoming
Catalysts
This week the calendar is a bit empty on the data front. The main events are all
scheduled for the latter part of the week. On Thursday, we have the US CPI and
the US Jobless Claims. On Friday, we conclude with the US PPI and the
University of Michigan Consumer Sentiment report.