USD
- The Fed left interest rates unchanged as expected with basically no change to the statement.
- Fed Chair Powell stressed once again that they are proceeding carefully as the full effects of policy tightening have yet to be felt.
- The recent US CPI missed expectations across the board bringing the expectations for rate cuts forward.
- The labour market is starting to show weakness as Continuing Claims are now rising at a fast pace and the recent NFP report missed across the board.
- The US Consumer Confidence and University of Michigan Consumer Sentiment continue to fall.
- The latest US ISM Manufacturing PMI missed expectations by a big margin, followed by a disappointing ISM Services PMI, although the latter remained in expansion.
- The recent US Retail Sales beat expectations, while the US PPI missed forecasts by a big margin.
- The recent Fedspeak has been leaning on the hawkish side, but last week’s inflation report pretty much confirmed that the Fed might be done for the cycle.
- The market doesn’t expect the Fed to hike anymore.
CHF
- The SNB kept interest rates steady at 1.75% vs. 2.00% expected as the central bank sees the significant tightening in recent quarters countering the remaining inflationary pressures.
- The SNB Governor Jordan said that “the central bank will not hesitate to tighten monetary policy further if necessary”, but the conditions at the moment do not call for further tightening at all.
- The Switzerland CPI ticked higher recently but the inflation rate is comfortably in the SNB’s 0-2% target band for both the headline and core measures.
- The Unemployment Rate matched the previous reading hovering at cycle lows.
- The Manufacturing PMI missed expectations and fell further into contraction, while the Services PMI remain in expansion.
- The market doesn’t expect the SNB to hike anymore.
USDCHF Technical Analysis – Daily Timeframe
On the daily chart, we can see that USDCHF broke below the low at 0.8888 as the disappointing US data recently weighed on the US Dollar. The bias is now skewed to the downside as the price has been printing lower lows and lower highs with the moving averages being crossed to the downside. From a risk to reward perspective, the best place to short for the sellers would be around the downward trendline where there’s also the confluence with the 50% Fibonacci retracement level, the previous swing low and the red 21 moving average.
USDCHF Technical Analysis – 4-hour Timeframe
On the 4-hour chart, we can see that since the break below the low, the price has been diverging with the MACD. This is generally a sing of weakening momentum often followed by pullbacks or reversals. In this case, we should see a pullback into the previous low around the 0.8888 level where we can also find the 38.2% Fibonacci retracement level for confluence. This is where more aggressive sellers are likely to step in with a defined risk above the level to target new lows.
USDCHF Technical Analysis – 1-hour Timeframe
On the 1-hour chart, we can see more closely the current price action with a meaningful level at 0.8855 as the price reacted to it multiple times. A break above this level should see more buyers piling in to target the 0.8888 resistance. Moreover, if the price then breaks above the 0.8888 level as well, the sellers will likely fold fast and the buyers will increase the bullish bets into the next resistance around the trendline.
Upcoming Events
Today we will get the latest US Jobless Claims report which is probably going to be the most important release of the week. Tomorrow, the US will be on holiday for Thanksgiving Day and therefore the liquidity in the market will be thinner. On Friday, we conclude the week with the latest US PMIs.
