FUNDAMENTAL OVERVIEW
USD:
The US Dollar has been
weakening across the board in this first part of the week following Trump’s
escalation over
Greenland. As a reminder, the US President threatened to impose 10% tariffs
starting on February 1 on the UK, France, Germany and a few other European
countries unless the U.S. is permitted to buy Greenland. The tariffs will rise
to 25% from June 1 in case of no deal.
The main narrative for the
greenback’s weakness is once again de-dollarisation due to the messy and
aggressive US policies. The current squeeze on recent dollar longs might be more
about positioning.
Given the recent USD
strength on some slightly hawkish repricing, this latest escalation kind of
unwinds those bets. If we were to get a de-escalation now, the US Dollar would
probably rally again, and more so if the economic data in the next weeks and
months strengthens.
Trump is giving a speech tomorrow
at the World Economic Forum in Davos and he will also likely talk about
Greenland with the European leaders. We might get headlines or a Trump’s post
on Truth Social on the matter, so watch out for any de-escalation or further
escalation.
CHF:
On the CHF side, the Swiss
Franc is once again surging on the back of the risk-off flows. In terms of
monetary policy, nothing has changed. The SNB left everything unchanged at the
last meeting and sounded a bit more positive on the future outlook given the
lower US tariff rate. SNB’s members continue to repeat that the bar for
negative rates remains high, so that leaves the Swiss Franc trading mostly
based on risk sentiment.
USDCHF TECHNICAL
ANALYSIS – DAILY TIMEFRAME
USDCHF – daily
On the daily chart, we can
see that USDCHF erased all the January gains in a couple of days on the latest
risk-off sentiment. If the price falls further, we can expect the buyers to
step in around the key support zone around the 0.7870 level. The sellers, on
the other hand, will look for a break lower to increase the bearish bets into
new cycle lows.
USDCHF TECHNICAL
ANALYSIS – 4 HOUR TIMEFRAME
USDCHF – 4 hour
On the 4 hour chart, we can
see that the price reached a key swing level near the 0.7900 handle. This is
where we can expect the first dip-buyers to step in with a defined risk below
the level to position for a rally into new highs. The sellers, on the other
hand, will look for a break lower to extend the drop into the 0.7870 support
next.
USDCHF TECHNICAL
ANALYSIS – 1 HOUR TIMEFRAME
USDCHF – 1 hour
On the 1 hour chart, we can
see that the price reached already the lower bound of the average daily range for today. In such cases, we
can generally see some consolidation or a pullback. We have a downward
trendline defining the bearish momentum on this timeframe. If we get a
pullback, we can expect the sellers to lean on the trendline with a defined
risk above it to position for a drop into new lows. The buyers, on the other
hand, will look for a break higher to increase the bullish bets into new highs.
UPCOMING CATALYSTS
Today we have the weekly US ADP jobs data and the potential US Supreme Court
decision on Trump’s tariffs. Tomorrow, we have Trump’s speech at the World
Economic Forum in Davos. On Thursday, we get the latest US Jobless Claims
figures. On Friday, we have the US Flash PMIs. Watch out for headlines and
Trump’s posts on Truth Social regarding Greenland as the market’s focus remains
on this latest escalation.
