Fundamental
Overview
The USD has weakened pretty
much across the board last week despite a strong US ADP and ISM Services PMI. As mentioned previously, when
markets react like that it’s generally a signal of a short-term top with the
market needing more to keep the trend going.
In fact, the market pricing
is now showing a 63% probability of a December cut, which is about right. The
NFP and CPI reports will have the final say, and hopefully we will get them
before the next FOMC decision.
On the CHF side, nothing
has changed. The SNB left interest rates steady and kept everything unchanged
at the last meeting. SNB’s members continue to repeat that the bar for negative
rates is high, and Chairman Shlegel recently said that he expects inflation to
rise slightly in the next quarters. We got a soft Swiss CPI report last week which weighed a bit
on the CHF, but it didn’t change anything for the SNB.
USDCHF
Technical Analysis – Daily Timeframe
On the daily chart, we can
see that USDCHF fell back below the key 0.8073 level. The sellers piled in with
a defined risk above the 0.8073 level to extend the pullback into the upward
trendline. If we get there, we can expect the buyers to lean on the trendline
with a defined risk below it to position for a rally into the 0.8171 level
next.
USDCHF Technical
Analysis – 4 hour Timeframe
On the 4 hour chart, we can
see that we have a downward trendline defining the current pullback. The sellers
will likely continue to lean on the trendline to keep pushing into new lows,
while the buyers will look for a break higher to pile in for a rally into the
0.8171 level next.
USDCHF Technical
Analysis – 1 hour Timeframe
On the 1 hour chart, we can
see that the price broke below the minor counter-trendline this morning. The
sellers might have more conviction to keep pushing into new lows here, while
the buyers will want to see the price breaking higher to start targeting the
0.8171 level. The red lines define the average daily range for today.
Upcoming
Catalysts
This week is pretty empty on the data front. We just have the weekly US ADP
data tomorrow.
This article was written by Giuseppe Dellamotta at investinglive.com.