USD
- The Fed left interest rates unchanged as expected at the last meeting 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 US CPI beat expectations for the second consecutive month with the disinflationary trend reversing.
- The US PPI beat expectations across the board by a big margin.
- The US Initial Claims beat expectations while Continuing Claims missed. Overall, the data remains steady.
- 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 Retail Sales missed expectations across the board by a big margin.
- 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 following a cool Swiss CPI report and a hot US CPI release. This has increased the policy divergence between the two central banks with the market bringing forward rate cuts for the SNB and pushing the Fed’s cuts backword. Despite this development, the pair struggled to extend the rally as the USD came under pressure across the board. From a risk management perspective, the buyers will have a much better risk to reward setup around the upward trendline where they will also find the confluence with the previous swing high level, the red 21 moving average and the 50% Fibonacci retracement level.
USDCHF Technical Analysis – 4-hour Timeframe
On the 4-hour chart, we can see that the price has been consolidating recently between the 0.8784 support and the 0.8840 resistance marked by the green box. This gives us two possible scenarios:
- A break to the upside should see the buyers piling in to position for a rally into new highs.
- A break to the downside is likely to see the sellers increasing the bearish bets into the upward trendline, eventually targeting a break below it.
USDCHF Technical Analysis – 1-hour Timeframe
On the 1-hour chart, we can see more closely the recent price action inside the green box. There’s not much to do here other than waiting for a clear breakout although traders could also “play the range” by buying at support and selling at resistance.
Upcoming Events
Today we have the FOMC Meeting Minutes on the agenda while tomorrow we will see the latest US Jobless Claims figures and US PMIs.
