Fundamental Overview
The USD rise stalled last week as the US government shutdown delayed 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 likely to keep weighing on the greenback. The market pricing is now back to 46 bps of easing by year-end and 112 bps by the end of 2026. This could still be too dovish, but we will need strong data to reprice.
In the absence of the government data, an October rate cut is now seen as a done deal. The reality is that an October cut was never really in question. It’s the December cut that could be priced out in case the data strengthens. We still have three NFP and two CPI reports before the December meeting.
On the CHF side, 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 the strength and weakness of other currencies.
USDCHF Technical Analysis – Daily Timeframe
On the daily chart, we can see that USDCHF is consolidating beneath the major trendline. The sellers continue to step in around the trendline with a defined risk above it to position for a drop back into the 0.7871 level. The buyers, on the other hand, are targeting a breakout to extend the rally into the 0.81 handle next.
USDCHF Technical Analysis – 4 hour Timeframe
On the 4 hour chart, we can see more clearly the rangebound price action at the trendline. Given the lack of catalysts, we might continue to have such a choppy trading around the trendline with high risks of fakeouts. If we get a bigger pullback from the trendline, the sellers will likely target the 0.7910 level where we can expect the dip-buyers to step in.
USDCHF Technical Analysis – 1 hour Timeframe
On the 1 hour chart, there's nothing we can add here as the choppy price action doesn't offer clear levels where to lean onto. The sellers will likely keep on stepping in around these levels with a defined risk above the recent highs to target new lows, while the buyers will look for breaks above the recent highs to extend the rally into the 0.81 handle next. The red lines define the average daily range for today.
Upcoming Catalysts
On Thursday we have Fed Chair Powell speaking and the US Jobless Claims (if the shutdown is lifted). On Friday, we conclude the week with the University of Michigan Consumer Sentiment report.
