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 US CPI
  yesterday came in line with expectations with the disinflationary progress
  continuing steady.
• The labour market has been showing signs of
  weakening lately but last week we got some strong releases with the US Jobless Claims and the NFP coming
  in strongly.
• The latest ISM Manufacturing
  PMI
  missed expectations falling further into contraction, while the ISM Services PMI beat
  forecasts holding on in expansion.
• The University of
  Michigan Consumer Sentiment survey came in much better than
  expected with inflation expectations tumbling.
• The hawkish Fed members recently shifted
  their stance to a more neutral position.
• The market expects the Fed to start cutting rates
  in Q2 2024.

CHF

• The SNB kept interest rates steady at 1.75% at the last meeting 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”, although the
  conditions now do not call for further tightening at all.
• The recent Switzerland CPI missed expectations by a big margin
  with the inflation rate remaining in the SNB’s target band.
• The Unemployment Rate remains steady
  at cycle lows.
• The Manufacturing PMI recently slightly beat expectations
  reaming in contraction, while the Services PMI hold on in expansion.
• The market expects the SNB to start
  cutting rates in Q3 2024.

USDCHF Technical Analysis –
Daily Timeframe

On the daily chart, we can see that USDCHF recently
pulled back into the red 21 moving average where we
had also the 38.2% Fibonacci retracement level
for confluence. The
price got rejected from the moving average as the sellers stepped in to
position for a drop into the lows around the 0.8550 level. The bias on the
daily timeframe remains bearish as the price has been printing lower lows and
lower highs with the moving averages being crossed to the downside, but on a
shorter timeframe the US Dollar might get some strength from the FOMC rate
decision.

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 swing low at 0.89. This is generally a sign of weakening
momentum often followed by pullbacks or reversals. In this case, the target
should be the start of the divergent formation around the 0.89 handle where we
can also find the confluence with the 61.8% Fibonacci retracement level and the
major trendline. To
confirm such a rally though, the price will first need to break above the resistance zone
around the 0.8775 level.

USDCHF Technical Analysis –
1-hour Timeframe

On the 1-hour chart, we can see more
closely the current price action with the pair ranging around the 0.8775
resistance zone. We got a break above it recently, but the price eventually
rolled over and fell below it. If the price gets into the resistance again, we
can expect the sellers to step in with a defined risk above it to position for
a drop into new lows increasing the bearish bets upon the break below the swing
low at 0.8725. The buyers, on the other hand, will want to see the price
breaking above the resistance to pile in and target a rally into the 0.89
handle.

Upcoming Events

Today, we have the US PPI data followed by the FOMC
rate decision where the Fed is expected to keep interest rates unchanged. Tomorrow,
we have the SNB rate decision where the central bank is expected to keep rates
unchanged and maybe hint to rate cuts in 2024. Later in the day, we will also
see the latest US Retail Sales and Jobless Claims figures, while on Friday we
conclude the week with the US PMIs.