Fundamental Overview
The USD has been weakening across the board ever since Fed’s Williams endorsed a December rate cut. The greenback then extended the losses further last week following soft ADP data and a Bloomberg report saying that Hassett emerged as the frontrunner for the Fed Chair position.
The probability for a December cut is now at 92%, which makes it a done deal. We won’t get much data before the FOMC meeting, so the focus will likely be mainly on jobless claims and ADP data, which haven’t been showing any strong improvement.
Weak data should keep weighing on the greenback, while strong data could provide some short-term reprieve. At the end of the day though, it’s all about the FOMC decision now and the following NFP and CPI reports.
On the CHF side, nothing has changed. The SNB left interest rates steady and kept everything unchanged at the last meeting. SNB’s members continue to repeat that the bar for negative rates is high, so that leaves the Swiss Franc trading mostly based on risk sentiment. We have the Swiss CPI report this week but given the above mentioned reasons, it's not going to change anything for the SNB.
USDCHF Technical Analysis – Daily Timeframe
On the daily chart, we can see that USDCHF reached the 0.81 handle again recently before pulling back as the greenback lost ground amid dovish Fed bets. There’s not much we can glean from this timeframe as the pair remains stuck in this wide range, 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 a downward trendline defining the current pullback. We can expect the sellers to lean on the trendline with a defined risk above it to keep targeting the 0.7980 support zone. The buyers, on the other hand, will want to see the price breaking higher to pile in for a rally into the 0.8170 level next.
USDCHF Technical Analysis – 1 hour Timeframe
On the 1 hour chart, we can see that we have a minor support zone around the 0.8025 level where the price got rejected from several times in the past few days. The buyers will likely step in here with a defined risk below the support to target a pullback into the trendline, while the sellers will look for a break lower to increase the bearish bets into the 0.7980 support. The red lines define the average daily range for today.
Upcoming Catalysts
Today we get the US ISM Manufacturing PMI. On Wednesday, we have the Swiss CPI, the US ADP and the US ISM Services PMI. On Thursday, we get the latest US Jobless Claims figures. On Friday, we conclude the week with the University of Michigan Consumer Sentiment report.
