FUNDAMENTAL OVERVIEW
USD:
The US dollar strengthened yesterday after Iran rejected the proposed ceasefire and outlined its own conditions that included closure of all US bases in the Gulf, reparations for the attacks, lifting of all sanctions and allowing Iran to retain its missile program without restrictions.
These conditions are of course unacceptable for the US, so we are now in a deadlock. For now, the US dollar is likely to remain supported until there is an official de-escalation.
CHF:
On the CHF side, the SNB left interest rates unchanged as widely expected at the last meeting but added that their willingness to intervene in the FX market has increased due to the conflict in the Middle East.
The central bank has also revised the near-term inflation forecast to the upside given the energy price shock but left all the other forecasts basically unchanged. There’s clearly no appetite for negative interest rates as the SNB expects to counteract downward pressure on inflation from a strong franc via interventions.
USDCHF TECHNICAL ANALYSIS – DAILY TIMEFRAME
On the daily chart, we can see that USDCHF is trading around the major downward trendline. 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 look for a break higher to increase the bullish bets into the 0.8040 level next.
USDCHF TECHNICAL ANALYSIS – 4 HOUR TIMEFRAME
On the 4 hour chart, we have a consolidation between the 0.7835 support and the trendline. Traders will likely continue to play the range by buying around the support and selling around the trendline until we get a breakout on either side.
USDCHF TECHNICAL ANALYSIS – 1 HOUR TIMEFRAME
On the 1 hour chart, we have a minor upward trendline defining the recent bullish momentum. The buyers will likely continue to lean on the trendline to keep pushing into new highs, while the sellers will look for a break lower to increase the bearish bets into the support. The red lines define the average daily range for today.
UPCOMING CATALYSTS
Today we get the latest US Jobless Claims figures.
