Fundamental
Overview
The USD rise stalled last
week as the US government shutdown delayed many key US economic reports. The
dollar “repricing trade” needs strong US data to keep going, especially on the
labour market side, so any hiccup on that front is likely to keep weighing on
the greenback. The market pricing is now back to 46 bps of easing by year-end
and 112 bps by the end of 2026. This could still be too dovish, but we will
need strong data to reprice.
In the absence of the
government data, an October rate cut is now seen as a done deal. The reality is
that an October cut was never really in question. It’s the December cut that
could be priced out in case the data strengthens. We still have three NFP and
two CPI reports before the December meeting.
On the CHF side, the SNB
left interest rates steady and kept everything unchanged at the last meeting.
SNB’s President Schlegel didn’t offer any forward guidance but he did say that
the bar to cut rates further is very high and negative inflation prints in the
short-term won’t be enough.
The last Swiss inflation
prints rebounded a bit but there’s a long way to go before breaching their 2% inflation
limit. So, this leaves the CHF trading mostly based on the strength and
weakness of other currencies.
USDCHF
Technical Analysis – Daily Timeframe
USDCHF daily
On the daily chart, we can
see that USDCHF is consolidating beneath the major trendline. The sellers continue to step in
around the trendline with a defined risk above it to position for a drop back
into the 0.7871 level. The buyers, on the other hand, are targeting a breakout
to extend the rally into the 0.81 handle next.
USDCHF Technical
Analysis – 4 hour Timeframe
USDCHF 4 hour
On the 4 hour chart, we can
see more clearly the rangebound price action at the trendline. Given the lack
of catalysts, we might continue to have such a choppy trading around the trendline
with high risks of fakeouts. If we get a bigger pullback from the trendline,
the sellers will likely target the 0.7910 level where we can expect the
dip-buyers to step in.
USDCHF Technical
Analysis – 1 hour Timeframe
USDCHF 1 hour
On the 1 hour chart, there’s nothing we can add here as the choppy price action doesn’t offer clear levels where to lean onto. The sellers will likely keep on stepping in around these levels with a defined risk above the recent highs to target new lows, while the buyers will look for breaks above the recent highs to extend the rally into the 0.81 handle next. The red lines define the average daily range for today.
Upcoming
Catalysts
On Thursday we have Fed Chair Powell speaking and the US Jobless
Claims (if the shutdown is lifted). On Friday, we conclude the week with the
University of Michigan Consumer Sentiment report.
