Fundamental
Overview
The US Dollar is now lower
across the board as the market erased most of the greenback’s gains following
Trump’s victory. This has been a puzzling reaction as Trump’s policies are
likely to spur growth and potentially end the Fed’s easing cycle earlier than
expected.
We can argue that the
market was already positioned for a Trump’s victory as we saw the greenback
rallying for a couple of weeks leading into the US election. So, this might
just be a “sell the fact” reaction and the market might now need more to keep
bidding the USD.
Another possible
explanation is that the market is more focused on global growth now and that’s
generally bearish for the greenback. We saw something similar in 2016 when the
USD rallied strongly once Trump got elected but after a couple of months, it went
into a 2-year long downtrend.
The Fed for now remains
neutral and on track to keep cutting rates. Yesterday, they cut by 25 bps as expected and given the overall neutral
message, the market expects another 25 bps cut in December. Strong data from
now until the December meeting though could change their plans for 2025.
We have the US CPI report
next week and that’s going to be a test. If the US Dollar sells off on hot
data, then the market might be indeed focusing on global growth rather than the
potential for an earlier pause in the Fed’s easing cycle.
USDCHF
Technical Analysis – Daily Timeframe
USDCHF Daily
On the daily chart, we can
see that USDCHF couldn’t extend the rally above the key resistance zone around the 0.8730 level. We now
have an upward trendline
defining the bullish momentum. We can expect the buyers to lean on it to
position for a rally into new highs, while the sellers will look for a break lower
to increase the bearish bets into new lows.
USDCHF Technical
Analysis – 4 hour Timeframe
USDCHF 4 hour
On the 4 hour chart, we can
see that we have a minor support around the 0.87 handle. The buyers will likely
step in there with a defined risk below it to target new highs, while the
sellers will look for a break lower to increase the bearish bets into the major
trendline.
USDCHF Technical
Analysis – 1 hour Timeframe
USDCHF 1 hour
On the 1 hour chart, there’s
not much to add here as the buyers will look for a bounce around the 0.87
handle, while the sellers will look for a break. The red lines define the average daily range for today.
Upcoming
Catalysts
Today we conclude the week with the University of Michigan Consumer Sentiment
report.