Fundamental
Overview
The USDCHF pair eventually
erased the entire drop following the more dovish than expected Powell’s speech at the Jackson Hole Symposium. The
focus is now on the key data this week with the ISM Manufacturing PMI and the
NFP reports in the spotlight.
The market is waiting for
the key economic releases this week, and especially the NFP report, as that
will likely decide whether the Fed is going to deliver a standard 25 bps cut or
go for a more aggressive 50 bps cut in the upcoming meeting.
Right now, it looks like
the Fed is going to cut rates into a resilient economy, so one has to be
mindful that we might eventually get an increase in economic activity that
could lift long term yields.
That might not be the
market’s focus at the moment but it’s something to keep an eye on. The focus
right now is on the US labour market data as more weakening could not only
trigger a more aggressive Fed easing but also bring back recessionary fears
which should support the CHF.
Therefore, besides the
headline ISM number today, watch also the employment sub-index as a drop into
new lows could spook the markets while an improvement could lead to a positive
sentiment.
The Swiss
CPI today came out a touch softer than expected although the Core measure
remained unchanged. That diminished the probabilities for a 50 bps cut by the
SNB at the upcoming meeting.
USDCHF
Technical Analysis – Daily Timeframe
USDCHF Daily
On the daily chart, we can
see that USDCHF is approaching the 0.8555 level. That’s where we can expect the
sellers to step in with a defined risk above the level to position for a drop
into the 0.8333 level. The buyers, on the other hand, will want to see the
price breaking higher to increase the bullish bets into the 0.8730 level next.
USDCHF Technical
Analysis – 4 hour Timeframe
USDCHF 4 hour
On the 4 hour chart, we can
see that from a risk management perspective, the sellers will have a better
risk to reward setup around the 0.8630 level where they will find the confluence
of the trendline
and the 61.8% Fibonacci retracement level. The buyers, on the other
hand, will want to see the price breaking higher to increase the bullish bets
into the 0.8730 level.
USDCHF Technical
Analysis – 1 hour Timeframe
USDCHF 1 hour
On the 1 hour chart, we can
see that we have a minor upward trendline defining the current bullish momentum.
The buyers will likely keep on leaning on it to position for new highs, while
the sellers will want to see the price breaking lower to increase the bearish
bets into the 0.8333 level. The red lines define the average daily range for today.
Upcoming
Catalysts
Today we have the US ISM Manufacturing PMI. Tomorrow, we have the US Job
Openings. On Thursday, we get the US Jobless Claims figures and the ISM
Services PMI. Finally, on Friday, we conclude the week with the US NFP
report.
