Fundamental Overview
The USD opened higher today and continued to dominate throughout the Asian session as we got once again some tariffs headlines that weighed on the risk sentiment. In fact, late yesterday Trump announced that he will impose 25% tariffs and sanctions on Colombia because they refused to take the deported migrants.
Colombia retaliated soon after by imposing 25% tariffs on US imports. Late in the Asian session though, we got the news that the US will hold the tariffs and sanctions in reserve as Colombia accepted the illegal migrants returned from the US. That saw the US Dollar getting weaker again and the fall in Treasury yields caused by the stock market selloff weighed on the greenback further.
On the CHF side, nothing has changed for now. As a reminder, the SNB cut interest rates by 50 bps at the last policy meeting bringing the policy rate to 0.50% and dropping the language signalling further cuts in the coming quarters.
This suggests that the central bank will likely slow the pace of easing which is something that the market was already expecting with two 25 bps cuts priced in for this year. The recent Swiss CPI didn’t change much for the central bank as the data came basically in line with expectations.
USDCHF Technical Analysis – Daily Timeframe
On the daily chart, we can see that USDCHF continues to pull back with the major trendline being eyed as the first target. From a risk management perspective, the buyers will have a better risk to reward setup around the trendline. The sellers, on the other hand, will want to see the price breaking lower to increase the bearish bets into the 0.87 handle next.
USDCHF Technical Analysis – 4 hour Timeframe
On the 4 hour chart, we can see that we have a minor downward trendline defining the current pullback. The sellers will likely continue to lean on the trendline to keep pushing into new lows, while the buyers will look for a break higher to start targeting new highs.
USDCHF Technical Analysis – 1 hour Timeframe
On the 1 hour chart, we can see that the price broke below the minor support around the 0.9030 level. The sellers increased the bearish bets into the trendline, while the buyers will need to wait for the price to rise back above the level to position for a break above the downward trendline. The red lines define the average daily range for today.
Upcoming Catalysts
Tomorrow we get the US Consumer Confidence data. On Wednesday, we have the FOMC Policy Decision. On Thursday, we get the US Q4 GDP report and the latest US Jobless Claims figures. On Friday, we conclude the week with the US PCE and the US Employment Cost Index.
