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 solid.
• Overall, the economic data started to surprise to
  the downside lately.
• Last week the ISM Services PMI and Jobless Claims
  surprised to the upside.
• The Fed members are leaning more towards a pause in
  September.
• The market doesn’t expect the Fed to hike at the September
  meeting, but there’s now a 50/50 chance of a hike in November.

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 remaining
  within the SNB 0-2% target band.
• The Unemployment
  Rate matched the previous reading remaining near the cycle lows.
• 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 that was
defining the major downtrend. The pair remains in a clear uptrend with the
price printing higher highs and higher lows and the moving averages being
crossed to the upside. The pair got stuck into a consolidation phase after the
breakout as the market awaits new data before the next major move. The breakout
of the trendline though opened the door for a rally into the 0.9122 resistance.

USDCHF Technical Analysis –
4-hour Timeframe

On the 4-hour chart, we can see that USDCHF is
basically trading withing a major rising channel and the price started to
consolidate around the upper bound of the channel. From a risk management
perspective, the buyers would be better off waiting for a pullback into the
0.8858 support where we have the confluence with the
38.2% Fibonacci retracement level
and the daily red 21 moving average. That’s where we can expect the buyers to
pile in with a defined risk below the support and target the 0.9122 resistance.
The sellers, on the other hand, are likely to pile in here around the upper
bound of the channel to target the support level first and the lower bound of
the channel in case the price breaks through.

USDCHF Technical Analysis –
1-hour Timeframe

On the 1-hour chart, we can see that we
have this mini range between the 0.89 support and 0.8940 resistance. The best
strategy here is generally to stay out and wait for a clear breakout. A break
to the upside should see more buyers piling in to extend the rally into the 0.9122
resistance, while a break to the downside should see more sellers coming into
the market to extend the fall into the support zone.

Upcoming Events

This week we have many important events. Today is the US
CPI Day, which is expected to show an increase in headline inflation due to
higher energy prices but further disinflation in the core measure. Tomorrow, we
will see the latest US Jobless Claims, PPI and Retail Sales data. Finally on
Friday, we get the University of Michigan Consumer Sentiment report. Strong
data is likely to boost the USD, while weak readings should weaken it in the
short term.

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