USDCHF Technical Analysis – We are buying and selling at a key resistance zone

Fundamental
Overview

The USD regained some
ground in the final part of last week and extended the gains yesterday although
we haven’t got any meaningful catalyst for the move. Overall, we continue to
range as the market is waiting for something new for the next sustained trend.

Given that the “short US
dollar” is now the most crowded trade, such quick unwinding moves are natural, and
it will take something meaningful to lead the market to expect more rate cuts
than currently priced in and weaken the greenback further.

On the CHF side, the SNB has
now likely finished its easing cycle as they got back to zero interest rates
policy. We will likely need a series of downside surprises in the inflation
data to force them to go into negative territory at the December meeting. The
market doesn’t expect the SNB to cut anymore.

USDCHF
Technical Analysis – Daily Timeframe

On the daily chart, we can
see that USDCHF has pulled back into the key resistance
around the 0.8050 level where we can also find the major trendline
for confluence.
This is where we can expect the sellers to step in with a defined risk above the
resistance to position for a drop into new lows. The buyers, on the other hand,
will look for a break higher to start targeting the 0.85 handle next.

USDCHF Technical
Analysis – 4 hour Timeframe

On the 4 hour chart, we can
see that we have a minor upward trendline defining the bullish momentum. If we
get a pullback from the resistance, the buyers will likely lean on the
trendline with a defined risk below it to keep targeting a breakout. The
sellers, on the other hand, will look for a break lower to increase the bearish
bets into new lows.

USDCHF Technical
Analysis – 1 hour Timeframe

On the 1 hour chart, we can
see that we have another minor upward trendline defining the bullish momentum
on this timeframe. The buyers continue to lean on it to keep pushing into new
highs, while the sellers will need a break lower to target a deeper pullback
into the next trendline. The red lines define the average daily range for today.

Upcoming
Catalysts

Today we have the US Job Openings and
Consumer Confidence data. Tomorrow, we have the US ADP, the US Q2 GDP and the
FOMC rate decision. On Thursday, we get the US PCE price index, the US Jobless
Claims and the US Employment Cost Index. Finally, on Friday, we conclude the
week with the US NFP report and the US ISM Manufacturing PMI.

This article was written by Giuseppe Dellamotta at investinglive.com.