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 CPI beat expectations for the second consecutive month with the disinflationary trend reversing.
- 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 June.
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 missed expectations across the board by a big margin.
- 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 cut rates in March.
USDCHF Technical Analysis – Daily Timeframe
On the daily chart, we can see that USDCHF broke through the 0.8820 level like nothing following a cool Swiss CPI report and a hot US CPI release. This might be setting a slight policy divergence with the market bringing forward rate cuts for the SNB and pushing the Fed’s cuts backword. The buyers will now start looking for dip-buying opportunities to target the 0.91 handle.
USDCHF Technical Analysis – 4-hour Timeframe
On the 4-hour chart, we can see that we have a good support zone around the 0.8820 level where we can find the confluence with the trendline, the 50% 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 trendline to position for a rally into the 0.91 handle. 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 next major trendline around the 0.8650 level.
USDCHF Technical Analysis – 1-hour Timeframe
On the 1-hour chart, we can see more closely the recent price action and the bullish setup around the 0.8820 level. The hot US CPI release is still fresh in the market’s mind so we might not even get a pullback into the support zone. In fact, if the price were to break above the minor counter-trendline, we can expect the buyers to pile in already riding the current bullish momentum. The sellers, on the other hand, are just better to wait for a break below the trendline before starting to look for bearish trades.
Upcoming Events
Tomorrow we will see latest US Jobless Claims figures and the US Retail Sales data, while on Friday, we conclude the week with the US PPI and the University of Michigan Consumer Sentiment survey.
