Fundamental
Overview
The USD strengthened a bit
on Friday following some positive Trump’s comments on China as Treasury yields
bounced and erased the Thursday’s losses. Overall, the US dollar performance
has been mixed as markets have been driven by quick changes in risk sentiment since
Trump’s tariffs threat.
On the domestic side, the
US government shutdown continues to delay 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 weighing on the greenback.
The BLS will release the US
CPI report on Friday despite the shutdown, so that’s going to be a key risk
event. That will need to be seen in the context of US-China relations and any
negative shock by that time though. If things go south, then the CPI will not
matter much as growth fears will trump everything else.
On the CHF side, nothing
has changed. 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 risk sentiment.
USDCHF
Technical Analysis – Daily Timeframe
USDCHF daily
On the daily chart, we can
see that USDCHF broke below the major upward trendline last week and extended the drop
into the 0.7872 level before pulling back a bit after some positive Trump’s
comments on tariffs. If the price rolls over again, we can expect the buyers to
step in around the 0.7872 level with a defined risk below it to keep targeting
a rally into the 0.8073 level. The sellers, on the other hand, will want to see
the price breaking 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 downward trendline defining the bearish momentum. We are
trading a bit above the trendline with some evident rejections. This is where
we can expect the sellers to step in with a defined risk above the trendline to
position for a drop into new lows. The buyers, on the other hand, will likely
pile in here to target a rally into the 0.8073 level next.
USDCHF Technical
Analysis – 1 hour Timeframe
USDCHF 1 hour
On the 1 hour chart, we can
see more clearly the price action around the trendline and the minor resistance
zone around the 0.7935 level. The sellers will likely continue to step in below
the resistance, while the buyers will want to see the price breaking higher to
increase the bullish bets into new highs. The red lines define the average daily range for today.
Upcoming
Catalysts
The focus remains
on the US-China developments but on Friday we will also get the US CPI report and the US flash PMIs.
