USDCHF Technical Analysis – Status quo ahead of the key US data | Forexlive

Fundamental
Overview

The USD continues to remain
supported since the last FOMC decision as the market perceived it as more
hawkish than expected. After the rally during the low volume Christmas
holidays, we are now seeing a pullback pretty much across the board.

The market’s pricing didn’t
change much with roughly two rate cuts priced in for this year, which is in
line with the Fed’s projections. The central bank has switched its focus back
to inflation, so the next US CPI report should have a bigger influence on
interest rates expectations than the US NFP this Friday (barring big
deviations).

On the CHF side, 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 Swiss
CPI released today 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 extended the rally above the 0.91 handle during the Christmas
holidays before giving back most of the gains. 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 the price broke below the trendline that was defining the bullish momentum
on this timeframe. This is generally a signal of a loss of momentum with high
chances of bigger pullbacks.

The sellers will need to
break below the support
zone around the 0.9020 level to increase the bearish bets into the major
trendline. The buyers, on the other hand, will likely step in around these
levels to position for a rally into new highs.

USDCHF Technical
Analysis – 1 hour Timeframe

On the 1 hour chart, we can
see that we have a minor counter-trendline defining the current pullback. The
buyers will want to see the price breaking above the counter-trendline to
increase the bullish bets into new highs, while the sellers will likely lean on
it to position for the break below the support zone. The red lines define the average daily range for today.

Upcoming
Catalysts

Today, we get the US ISM Services PMI and the US Job Openings data. Tomorrow,
we have the US ADP and the FOMC Meeting Minutes. On Thursday, we get the latest
US Jobless Claims figures. On Friday, we conclude the week with the US NFP
report.