USD
- The Fed left interest rates unchanged as expected at the last meeting with a shift in the statement that indicated the end of the tightening cycle.
- The latest US CPI slightly beat expectations but analysts expect the Core PCE to print at 0.2% M/M again following the CPI data.
- The labour market continues to soften but remains resilient with US Jobless Claims beating expectations week after week.
- The latest ISM Manufacturing PMI beat expectations, while the ISM Services PMI missed by a big margin.
- The US Retail Sales beat expectations across the board.
- The University of Michigan Consumer Sentiment report jumped to the highest levels since 2021.
- The Fed members recently have been pushing back on the aggressive rate cuts expectations.
- The market’s expectations for the first rate cut were pushed back to May following strong economic data.
CHF
- The SNB kept interest rates unchanged at 1.75% at the last meeting stating that they will adjust policy if necessary to ensure that inflation remains in the target range.
- The SNB Governor Jordan said that the monetary conditions are appropriate and that they do not forecast any further tightening.
- The latest Switzerland CPI beat expectations although the rate remains within the SNB’s target band.
- The Unemployment Rate remains steady at cycle lows.
- The Manufacturing PMI rose slightly although it remains in contraction, while the Services PMI hold on in expansion.
- The market expects the SNB to start cutting rates in Q2.
USDCHF Technical Analysis – Daily Timeframe
On the daily chart, we can see that USDCHF broke above the key trendline and extended the rally into the 0.87 handle. The bias remains bullish as the price continues to print higher highs and higher lows with the moving averages being crossed to the upside. The buyers will look for dip-buying opportunities with the first one coming at the upward trendline where they can position for a rally into the 0.88 handle. The sellers, on the other hand, will want to see the price breaking lower to pile in and target a drop back to the lows.
USDCHF Technical Analysis – 4-hour Timeframe
On the 4-hour chart, we can see that the price has been diverging with the MACD recently which is generally a sign of weakening momentum often followed by pullbacks or reversals. In this case, the target for the pullback should be around the 0.8635 low which aligns perfectly with the support zone around the trendline where we can also find the 38.2% Fibonacci retracement level for confluence.
USDCHF Technical Analysis – 1-hour Timeframe
On the 1-hour chart, we can see more closely the recent price action with the bullish momentum being weaker as the pair started to have a more rangebound performance. From a risk management perspective, the buyers will have a much better risk to reward setup around the trendline while the sellers will likely get a confirmation of the start of a downtrend in case the price breaks below the trendline. Therefore, the support zone around the 0.8635 level should be watched closely.
Upcoming Events
Today the main event will be the US PMIs as the market will want to see how business activity has fared in January after some worrying data from regional surveys. Tomorrow, we have the Advance US Q4 GDP and the latest US Jobless Claims figures. Finally, on Friday we conclude the week with the US PCE report.
