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 Core PCE last
  week came in line with forecasts with the disinflationary progress continuing
  steady.
• The labour market continues to show weakness as Continuing Claims are now
  rising at a fast pace with the last NFP report
  missing across the board and yesterday’s Job Openings falling
  much more than expected.
• The ISM Manufacturing
  PMI
  last week missed expectations falling further into contraction, while the ISM Services PMI
  yesterday beat forecasts holding on in expansion.
• The hawkish Fed members recently shifted
  their stance to a more neutral position.
• The market expects the Fed to start cutting rates
  as soon as Q1 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”, but the
  conditions at the moment 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 doesn’t expect the SNB to
  hike anymore.

USDCHF Technical Analysis –
Daily Timeframe

On the daily chart, we can see that since the break
below the swing low around the 0.89 handle, USDCHF just kept on falling
strongly as the market continued to price in aggressively multiple rate cuts
for the Fed in 2024. This pricing might have gone too far too fast and if the
economic data doesn’t fall off a cliff in the next few weeks, we might see a pullback
in the pair. From a risk to reward point of view, the best spot for the sellers
would be the resistance zone
around the 0.89 handle where we can find the confluence with the
trendline and the
50% Fibonacci retracement level.

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 recent
break above the minor downward trendline might be an early signal of a
reversal, but the buyers will need to break above the most recent lower high at
0.8770 to confirm it. The sellers, on the other hand, are likely to step in
around these levels with a defined risk above the 0.8770 level to position for
a drop into new lows.

USDCHF Technical
Analysis – 1-hour Timeframe

On the 1-hour chart, we can see more
closely the current price action with the pair tentatively approaching the
0.8770 level again. What happens around this level should determine where we go
next as a break to the upside is likely to trigger a rally into the 0.89
resistance while a strong rejection and a break below the 0.87 handle should
lead to a drop into new lows.

Upcoming Events

Today we have another US labour market report with
the release of the US ADP data. Tomorrow, it will be the time for the Switzerland
Unemployment rate and the US Jobless Claims figures, while on Friday we
conclude the week with the NFP report.