Fundamental Overview
The USD strengthened a bit on Friday following some positive Trump’s comments on China as Treasury yields bounced and erased the Thursday’s losses. Overall, the US dollar performance has been mixed as markets have been driven by quick changes in risk sentiment since Trump’s tariffs threat.
On the domestic side, the US government shutdown continues to delay many key US economic reports. The dollar “repricing trade” needs strong US data to keep going, especially on the labour market side, so any hiccup on that front is weighing on the greenback.
The BLS will release the US CPI report on Friday despite the shutdown, so that’s going to be a key risk event. That will need to be seen in the context of US-China relations and any negative shock by that time though. If things go south, then the CPI will not matter much as growth fears will trump everything else.
On the CHF side, nothing has changed. The SNB left interest rates steady and kept everything unchanged at the last meeting. SNB’s President Schlegel didn’t offer any forward guidance but he did say that the bar to cut rates further is very high and negative inflation prints in the short-term won’t be enough.
The last Swiss inflation prints rebounded a bit but there’s a long way to go before breaching their 2% inflation limit. So, this leaves the CHF trading mostly based on risk sentiment.
USDCHF Technical Analysis – Daily Timeframe
On the daily chart, we can see that USDCHF broke below the major upward trendline last week and extended the drop into the 0.7872 level before pulling back a bit after some positive Trump’s comments on tariffs. If the price rolls over again, we can expect the buyers to step in around the 0.7872 level with a defined risk below it to keep targeting a rally into the 0.8073 level. The sellers, on the other hand, will want to see the price breaking lower to increase the bearish bets into new lows.
USDCHF Technical Analysis – 4 hour Timeframe
On the 4 hour chart, we can see that we have a downward trendline defining the bearish momentum. We are trading a bit above the trendline with some evident rejections. This is where we can expect the sellers to step in with a defined risk above the trendline to position for a drop into new lows. The buyers, on the other hand, will likely pile in here to target a rally into the 0.8073 level next.
USDCHF Technical Analysis – 1 hour Timeframe
On the 1 hour chart, we can see more clearly the price action around the trendline and the minor resistance zone around the 0.7935 level. The sellers will likely continue to step in below the resistance, while the buyers will want to see the price breaking higher to increase the bullish bets into new highs. The red lines define the average daily range for today.
Upcoming Catalysts
The focus remains on the US-China developments but on Friday we will also get the US CPI report and the US flash PMIs.
