USDCHF Technical Analysis | Forexlive

The miss in the US CPI last week triggered a selloff in the US Dollar
across the board. The market is increasingly confident that the July hike will
be the last one for this cycle and what will follow are rate cuts sometime in
early 2024. Moreover, there’s also a positive risk sentiment in the market due
to the soft-landing narrative caused by the falling inflation rate, resilient
labour market and rising consumer sentiment. All of the above weighed a lot on
the USD.

Conversely, the SNB raised
interest rates by 25 bps as expected at the last meeting and communicated that
additional rate hikes cannot be ruled out as it maintains the hawkish stance.
The Swiss CPI data though showed the inflation
rate returning back within the SNB target band and should translate into a
pause for the SNB at the next meeting, all else being equal.

USDCHF Technical Analysis –
Daily Timeframe

On the daily chart, we can see that the incredibly
strong selloff following first the miss in the US NFP report and then the miss
in the US CPI report extended for days with almost no pullbacks. The price is
now a bit overstretched as depicted by the distance from the blue 8 moving average. In such
instances, we can generally see some consolidation or a pullback into the
moving average before the next major move.

USDCHF Technical Analysis –
4 hour Timeframe

On the 4 hour chart, we can see that the bearish
momentum is finally waning as the price is starting to consolidate around the
0.86 handle. We can also see that we have a divergence with the
MACD which is
generally a sign of weakening momentum often followed by pullbacks or
reversals. In this case, a good spot for the sellers would be the 0.8760 resistance where we
can also find the 38.2% Fibonacci retracement level of
the entire leg lower. At the moment, aggressive sellers are already leaning on
the red 21 moving average, but if the price rises above the moving average, we
should see the buyers piling in to target a pullback into the 0.8760 level.

USDCHF Technical Analysis –
1 hour Timeframe

On the 1 hour chart, we can see that the
price has recently broke out of the downward trendline as the
momentum started to ebb. We can also notice that we have a minor resistance
level at 0.8630, which will be the key level that the buyers will need to break
to extend the rally into the 0.8760 resistance. More aggressive sellers, on the
other hand, might lean on that level to target a new lower low.

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The economic data
to watch next is the US Jobless Claims report on Thursday. Good data should
give the US Dollar a boost in the short term, but bad data would call for a
more dovish market reaction and weigh on the greenback again.