Fundamental
Overview
The USD remains on the
backfoot as the US data continues to point to resilient growth with falling
inflation. This week, we got a good US Retail Sales report suggesting that the stories
of deteriorating consumer spending have been exaggerated. Overall, this should
continue to support the soft-landing narrative and be positive for the risk
sentiment.
The CHF, on the other hand,
keeps on gaining against the US Dollar mainly because of the positive sentiment
as the US data continues to support at least two rate cuts from the Fed without
sending recessionary signals. Yesterday’s general greenback weakness might have
also been due to the drop in the USDJPY pair as flows there could have spilled
over other markets.
On the monetary policy
front, the recent Swiss CPI report missed expectations once
again, so there’s no need for the central bank to worry about inflation. The
probabilities for another rate cut in September are currently at 73%.
USDCHF
Technical Analysis – Daily Timeframe
USDCHF Daily
On the daily chart, we can
see that USDCHF fell below the 0.8885 support yesterday wiping out completely the gains from
the SNB rate decision. This switched the bias to the downside as the sellers
are now more in control. We might see a bounce here around the previous low at
0.8828 but the sellers will look for a rally to sell into and target a drop
into the 0.8730 level next. The buyers, on the other hand, will want to see the
price rising back above the 0.8885 level to regain some control and position
for new highs.
USDCHF Technical
Analysis – 4 hour Timeframe
USDCHF 4 hour
On the 4 hour chart, we can
see that we have a good resistance around the 0.8885 level where we can find the
50% Fibonacci retracement level for confluence. This is where we can expect the
sellers to step in with a defined risk above the level to position for a drop
into the 0.8730 level with a better risk to reward setup. The buyers, on the
other hand, will want to see the price breaking higher to regain some control
and target an extension to the minor trendline around the 0.8920 level.
USDCHF Technical
Analysis – 1 hour Timeframe
USDCHF 1 hour
On the 1 hour chart, we can
see more clearly the bearish setup around the 0.8885 level. More aggressive
sellers might pile in on a break below the recent low at 0.8820 but the risk to
reward setup would be worse. The red lines define the average daily range for today.
Upcoming
Catalysts
Today we get the latest US Jobless Claims figures.
