Fundamental Overview
The USD has been marginally weaker recently due to lower than expected US inflation figures last week that sent Treasury yields lower and made the market to price in higher chances of a second rate cut by the end of the year.
Yesterday, the greenback weakened across the board following a WSJ report saying that Trump would lay out the trade vision but won’t impose tariffs yet. Tonight though, he spoke to the media and said that he intends to impose 25% tariffs on Canada and Mexico next week. Following the news, the US Dollar erased almost all the losses from the prior day.
On the CHF side, nothing has changed for now. As a reminder, the SNB cut interest rates by 50 bps at the last policy meeting bringing the policy rate to 0.50% and dropping the language signalling further cuts in the coming quarters.
This suggests that the central bank will likely slow the pace of easing which is something that the market was already expecting with two 25 bps cuts priced in for this year. The Swiss CPI last week didn’t change much for the central bank as the data came basically in line with expectations.
USDCHF Technical Analysis – Daily Timeframe
On the daily chart, we can see that USDCHF continues to pull back with the major trendline being eyed as the first target. From a risk management perspective, the buyers will have a better risk to reward setup around the trendline. The sellers, on the other hand, will want to see the price breaking lower to increase the bearish bets into the 0.87 handle next.
USDCHF Technical Analysis – 4 hour Timeframe
On the 4 hour chart, we can see that we have a minor downward trendline defining the current pullback. The sellers will likely lean on the trendline to position for a drop into the major trendline, while the buyers will look for a break higher to start targeting new highs.
USDCHF Technical Analysis – 1 hour Timeframe
On the 1 hour chart, we can see that we have a strong minor resistance zone around the 0.91 handle. The sellers will likely step in around these levels to target the major trendline, while the buyers will look for a break higher to position for a rally into the downward trendline targeting a break above it. The red lines define the average daily range for today.
Upcoming Catalysts
This week is pretty empty on the data front with just a couple of key releases scheduled for the latter part of the week. On Thursday, we get the latest US Jobless Claims figures, while on Friday we conclude the week with the Flash PMIs.
This article was written by Giuseppe Dellamotta at www.forexlive.com. Read More Details
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