USD
- The Fed left interest rates unchanged as expected while dropping the tightening bias in the statement but adding a slight pushback against a March rate cut.
- Fed Chair Powell stressed that they want to see more evidence of inflation falling back to target and that a rate cut in March is not their base case.
- The latest US GDP beat expectations by a big margin.
- The US PCE came mostly in line with expectations with the Core 3-month and 6-month annualised rates falling below the Fed’s 2% target.
- The US NFP report beat expectations across the board by a big margin.
- The ISM Manufacturing PMI surprised to the upside with the new orders index, which is considered a leading indicator, jumping back into expansion. Similarly, the ISM Services PMI beat expectations across the board with the employment sub-index erasing the prior drop and prices paid jumping above 60.
- The US Consumer Confidence report came in line with expectations but the labour market details improved considerably.
- The market now expects the first rate cut in May.
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 continues to be optimistic about inflation expecting it to remain below 2% this year.
- 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 bounced on the resistance turned support at 0.8555 and broke above the trendline after a quick rally triggered by an incredibly strong US NFP report. The buyers should keep on targeting the 0.8820 level as the first target, while the sellers will need some key breaks on the lower timeframes to turn the pair around.
USDCHF Technical Analysis – 4-hour Timeframe
On the 4-hour chart, we can see that we have a good support zone around the 0.8670 level where we can find the confluence with the broken trendline, the 38.2% Fibonacci retracement level and the red 21 moving average. This is where we can expect the buyers to step in with a defined risk below the support to position for a rally into the 0.8820 level. The sellers, on the other hand, will want to see the price breaking lower to invalidate the bullish setup and position for a drop back into the lows.
USDCHF Technical Analysis – 1-hour Timeframe
On the 1-hour chart, we can see that the breakout has been diverging with the MACD. This is generally a sign of weakening momentum often followed by pullbacks or reversals. In this case, it should point to a pullback into the 0.8670 support zone where buyers and sellers will express their views.
Upcoming Events
This week is basically empty on the data front with just the latest US Jobless Claims figures on Thursday being the only notable release.
