Fundamental
Overview
The USD has been weak
almost across the board since the NFP report as the softer than expected data
triggered a quick dovish repricing and a change in stance for many Fed members.
The market is pricing 57
bps of easing by year-end compared to just 35 bps before the NFP release. It’s
highly likely that more benign data will see Fed Chair Powell opening the door
for a cut in September at the Jackson Hole Symposium.
The focus now turned to the
US CPI report. We saw some dollar strength yesterday which could have been
hedging activity into the risk event. The recent Fedspeak suggests that a rate
cut in September might be unavoidable, so we might need very hot inflation data
to change their mind (and of course a good NFP report in September).
On the CHF side, we haven’t
got anything new in terms of monetary policy as the SNB is now in a long pause.
The latest Swiss CPI showed a slight improvement in inflation although it’s not
important as the central bank will not hike rates for a long time. The market
doesn’t expect the SNB to cut anymore.
There’s some focus at the
moment on the 39% tariffs that the US slapped on Switzerland. That is likely to
be resolved in the near future with the rate being set between 10-20% as we’ve
seen for most other countries.
USDCHF
Technical Analysis – Daily Timeframe
USDCHF Daily
On the daily chart, we can
see that USDCHF is trading above the key support zone around the 0.8050 level and the major trendline. The buyers will likely continue to
step in around the support with a defined risk below it to keep targeting the
0.84 handle next. 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 we have a minor upward trendline defining the bullish structure on this
timeframe. The trendline is near the support zone, so that area is going to be
key for traders. Buyers will look for a bounce, while the sellers will look for
a break.
USDCHF Technical
Analysis – 1 hour Timeframe
USDCHF 1 hour
On the 1 hour chart, we can
see that we have a minor support zone around the 0.8090 level. This is where we
can expect the buyers to step in with a defined risk below the zone to position
for a rally into the 0.84 handle. The sellers, on the other hand, will look for
a break lower to extend the pullback into the trendline. The red lines define the
average daily range for today.
It’s worth noting that we
have the US CPI report today so the technicals might not mean much and it would
be better to trade after the release.
Upcoming
Catalysts
Today we have the US CPI report. On
Thursday, we get the US PPI and the US Jobless Claims figures. On Friday, we
conclude the week with the US Retail Sales and the University of Michigan
Consumer Sentiment report. Focus also on Fedspeak, especially after the US CPI
data.
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