Fundamental Overview
The USD regained some ground in the final part of last week and extended the gains yesterday although we haven’t got any meaningful catalyst for the move. Overall, we continue to range as the market is waiting for something new for the next sustained trend.
Given that the “short US dollar” is now the most crowded trade, such quick unwinding moves are natural, and it will take something meaningful to lead the market to expect more rate cuts than currently priced in and weaken the greenback further.
On the CHF side, the SNB has now likely finished its easing cycle as they got back to zero interest rates policy. We will likely need a series of downside surprises in the inflation data to force them to go into negative territory at the December meeting. The market doesn’t expect the SNB to cut anymore.
USDCHF Technical Analysis – Daily Timeframe
On the daily chart, we can see that USDCHF has pulled back into the key resistance around the 0.8050 level where we can also find the major trendline for confluence. This is where we can expect the sellers to step in with a defined risk above the resistance to position for a drop into new lows. The buyers, on the other hand, will look for a break higher to start targeting the 0.85 handle next.
USDCHF Technical Analysis – 4 hour Timeframe
On the 4 hour chart, we can see that we have a minor upward trendline defining the bullish momentum. If we get a pullback from the resistance, the buyers will likely lean on the trendline with a defined risk below it to keep targeting a breakout. The sellers, on the other hand, will look for a break lower to increase the bearish bets into new lows.
USDCHF Technical Analysis – 1 hour Timeframe
On the 1 hour chart, we can see that we have another minor upward trendline defining the bullish momentum on this timeframe. The buyers continue to lean on it to keep pushing into new highs, while the sellers will need a break lower to target a deeper pullback into the next trendline. The red lines define the average daily range for today.
Upcoming Catalysts
Today we have the US Job Openings and Consumer Confidence data. Tomorrow, we have the US ADP, the US Q2 GDP and the FOMC rate decision. On Thursday, we get the US PCE price index, the US Jobless Claims and the US Employment Cost Index. Finally, on Friday, we conclude the week with the US NFP report and the US ISM Manufacturing PMI.
