USD
- The Fed left interest rates unchanged as expected at the last meeting and dropped the tightening bias in the statement.
- The US CPI yesterday beat expectations for the second consecutive month but it didn’t change the market’s pricing for rate cuts.
- The NFP report beat expectations on the headline number, but the unemployment rate and the average hourly earnings missed notably.
- The latest US ISM Manufacturing PMI missed expectations by a big margin remaining in contraction with the US ISM Services PMI following suit but holding on in expansion.
- The US Consumer Confidence missed expectations across the board.
- The market 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 latest Switzerland CPI beat expectations slightly although the Core measure eased further.
- 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 recently broke below the key upward trendline with the moving averages crossing over to the downside. This is generally a signal for a change of the trend, so we can expect the sellers to look for short opportunities on pullbacks. A break below the 0.8728 level would further confirm the resumption of the downtrend with the sellers increasing the bearish bets into the 0.8555 level. The buyers, on the other hand, will need to defend the 0.8728 level to avoid a complete breakdown and keep targeting new highs.
USDCHF Technical Analysis – 4-hour Timeframe
On the 4-hour chart, we can see that the price pulled back to retest the broken upward trendline and the sellers started to pile in as they had the confluence with the downward trendline and the 50% Fibonacci retracement level. The buyers, on the other hand, will want to see the price breaking higher and rise back above the upward trendline to invalidate the bearish setup and position for a rally into new highs.
USDCHF Technical Analysis – 1-hour Timeframe
On the 1-hour chart, we can see more closely the recent price action with some consolidation around the broken trendline. The sellers should remain in control as long as the price stays below the downward trendline. A break below the upward counter-trendline should see the sellers increasing their bearish bets into new lows targeting a break below the 0.8728 level. The buyers, on the other hand, will likely lean on the upward counter-trendline and the 0.8728 level to position for a rally into new highs with a better risk to reward setup.
Upcoming Events
Tomorrow we get the US PPI, the US Retail Sales and the US Jobless Claims figures. On Friday, we conclude the week with the University of Michigan Consumer Sentiment survey.
