KEY POINTS:
- US dollar remains supported despite mixed US data
- Traders turn their focus to the US NFP report for the next direction
- Swiss CPI matches estimates, SNB seen on hold for a long time
- USD/CHF rises into a key resistance near the 0.80 handle
FUNDAMENTAL OVERVIEW
USD:
The US dollar has been bouncing around in the past few days as traders continue to wait for the US NFP report. The US data this week has been mixed. We got a soft ISM Manufacturing PMI on Monday but a strong Services PMI yesterday. The ADP was good despite a slight miss, but Job Openings were soft.
In terms of macro, nothing has changed. The market is still pricing 62 bps of easing by year-end with 57% probability of a Fed cut coming in March at the earliest. We will need very soft NFP and CPI data to force the Fed to cut at the upcoming meeting, otherwise traders will just adjust the timing of the expected cuts in 2026 and might even increase bets in the case of weak data.
Tomorrow, the US Supreme Court scheduled an “opinion day”, so we might also potentially get a decision on Trump’s tariffs.
CHF:
On the CHF side, nothing has changed. The SNB left everything unchanged at the last meeting and sounded a bit more positive on the future outlook given the lower US tariff rate. SNB’s members continue to repeat that the bar for negative rates remains high, so that leaves the Swiss Franc trading mostly based on risk sentiment.
The Swiss CPI today matched expectations with the Core reading holding steady around 0.5%. Unless we get a strong negative shock in the economy or outright deflation, the SNB is unlikely to do anything for a long time.
USDCHF TECHNICAL ANALYSIS – DAILY TIMEFRAME
On the daily chart, we can see that USDCHF bounced from the bottom of the range around the 0.7970 level and it’s now approaching the 0.80 handle. There’s not much we can glean from this timeframe, so we need to zoom in to see some more details.
USDCHF TECHNICAL ANALYSIS – 4 HOUR TIMEFRAME
On the 4 hour chart, we can see that we have an important zone around the 0.7980 level where the price got rejected from several times in the past several months. This is where we can expect the sellers to step in with a defined risk above the zone to position for a drop into the bottom of the range. The buyers, on the other hand, will want to see the price breaking higher to increase the bullish bets into the top of the range around the 0.81 handle.
USDCHF TECHNICAL ANALYSIS – 1 HOUR TIMEFRAME
On the 1 hour chart, we can see that the price has been trading inside a rising channel into the key resistance. The RSI has been diverging with the latest push into the resistance indicating a loss of momentum. This might be a signal for a bigger pullback into the trendline around the 0.7930 level.
The buyers will likely continue to lean on the bottom of the channel to keep pushing into new highs, while the sellers will look for a break lower to increase the bearish bets into the major trendline. The red lines define the average daily range for today.
UPCOMING CATALYSTS
Today we get the latest US Jobless Claims figures. Tomorrow, we conclude the week with the US NFP report and potential US Supreme Court decision on Trump’s tariffs.
