USDCHF Technical Analysis | Forexlive

USD

• The Fed left interest rates unchanged as
  expected at the last meeting with basically no change to the statement.
• Fed Chair Powell stressed
  once again that they are proceeding carefully as the full effects of policy
  tightening have yet to be felt.
• The recent US CPI missed
  expectations across the board bringing the expectations for rate cuts
  forward.
• The labour market is
  starting to show weakness as Continuing Claims are now
  rising at a fast pace and the recent NFP report
  missed across the board. Last week though, the US Jobless Claims beat
  forecasts by a big margin, although volatility in the data is normal.
• The latest US PMIs came
  basically in line with expectations with a miss in the Manufacturing index and
  a beat in the Services measure.
• The US Consumer
  Confidence yesterday beat expectations although the
  details about the labour market continue to weaken.
• The Fed members have been leaning on the
  hawkish side, but more recently the tone changed to a more neutral stance.
• The market doesn’t
  expect the Fed to hike anymore.

CHF

• The SNB kept interest rates steady at 1.75% vs. 2.00% expected as the
  central bank sees the significant tightening in recent quarters countering the
  remaining inflationary pressures.
• The SNB Governor Jordan said that “the central bank will
  not hesitate to tighten monetary policy further if necessary”, but the
  conditions at the moment do not call for further tightening at all.
• The Switzerland CPI ticked higher recently but the
  inflation rate is comfortably in the SNB’s 0-2% target band for both the
  headline and core measures.
• The Unemployment Rate matched the
  previous reading hovering at cycle lows.
• The Manufacturing PMI missed expectations and fell
  further into contraction, while the Services PMI remain in expansion.
• The market doesn’t expect the SNB to
  hike anymore.

USDCHF Technical Analysis –
Daily Timeframe

On the daily chart, we can see that USDCHF broke
below the key swing low around the 0.89 handle and continued lower as the rate
cuts expectations weighed on the US Dollar. The price is now near the key swing
level at 0.8750 where we can expect the buyers to step in with a defined risk
below the level to position for a rally into the downward trendline. From a
risk to reward perspective, such a pullback would be a welcome development for
the buyers so they can enter at even better prices.

USDCHF Technical Analysis –
4-hour Timeframe

On the 4-hour chart, we can see that the price has
been diverging with the
MACD since
the break below the key swing low at 0.89. This is generally a sign of
weakening momentum often followed by pullbacks or reversals. In this case, it
might be a signal for an imminent pullback with the 0.89 handle being the
natural target. More conservative buyers may want to wait for the price to
break above the minor black trendline before joining the rally.

USDCHF Technical Analysis –
1-hour Timeframe

On the 1-hour chart, we can see more
closely the current price action with the minor black trendline defining the
short-term downtrend. If the price bounces on the 0.8750 level, we can expect
more aggressive sellers leaning on the trendline to position for a break below
the key swing level and target the cycle lows. The buyers, on the other hand,
will want to see the price breaking higher to increase the bullish bets into
the 0.89 resistance.

Upcoming Events

Tomorrow we will get the US PCE and US Jobless Claims
data with the market likely focusing more on the latter given that we already
saw the latest inflation data with the US CPI report just two weeks ago. On
Friday, we conclude the week with the US ISM Manufacturing PMI which missed
expectations by a big margin the last time.