Fundamental
Overview
The USD rallied across the
board last Friday following the hot US NFP report. The market priced out all the
aggressive rate cuts expectations and it’s now finally in line with the Fed’s
projections.
This week, the greenback
extended the gains as the market started to price in some chances of a pause in
November. The focus remains on the economic data.
Today we get the US CPI
report. We will likely need a hot report to see some more upside in the pair,
while a miss could see the pair falling on the market paring back the hawkish
expectations.
For the CHF, the Swiss CPI recently 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.
The market is pricing a 14% probability for a 50 bps cut in December.
USDCHF
Technical Analysis – Daily Timeframe
USDCHF Daily
On the daily chart, we can
see that USDCHF pulled back to retest the previous resistance now turned support around the 0.8550 level and rallied
back to test the recent highs. The buyers will want to see the price breaking
higher on a hot CPI to increase the bullish bets into the 0.8730 level next.
The sellers, on the other hand, will want to see a soft CPI and a drop back
below the 0.8550 support to increase the bearish bets into the 0.8333
level next.
USDCHF Technical
Analysis – 4 hour Timeframe
USDCHF 4 hour
On the 4 hour chart, we can
see that we have an upward trendline defining the current bullish
momentum. The buyers will likely keep on leaning on it to position for a break
above the resistance at 0.8607. The sellers, on the other hand, will want to
see the price breaking lower to pile in for a drop into the 0.8550 support and
beyond.
USDCHF Technical
Analysis – 1 hour Timeframe
USDCHF 1 hour
On the 1 hour chart, we can
see more clearly the recent price action. We can see that we have a nice
support zone around the 0.8580 level where we can find the confluence of the trendline and the previous
swing high level. All eyes are now on the US CPI report as it will likely
decide the trend for the next weeks. The red lines define the average daily range for today.
Upcoming
Catalysts
Today we have the US CPI report and the US Jobless Claims figures. Tomorrow,
we conclude with the US PPI and the University of Michigan Consumer Sentiment
report.