USDCHF Technical Analysis – The bullish momentum is waning

US:

• The Fed left interest rates unchanged as
  expected.
• The macroeconomic projections were revised higher
  as the economy showed much stronger resilience than expected and the Dot Plot
  showed that the majority of members still expects another rate hike by the end
  of the year with less rate cuts in 2024.
• Fed Chair Powell
  reaffirmed their data dependency but added that they will proceed carefully as
  they are trying to find the optimal level of rates. Powell also added that the
  soft landing is not the base case at the moment, although they are aiming for
  it.
• The latest US CPI came
  in line with expectations, so the market’s pricing remained roughly the same.
• The labour market
  displayed signs of softening although it remains fairly solid as seen also last
  week with the strong beat in Jobless Claims.
• The market doesn’t expect the Fed to hike again at
  the moment.

Switzerland:

• The SNB kept interest rates steady
  at 1.75% vs. 2.00% as the central bank sees the significant tightening in
  recent quarters countering the remaining inflationary pressures.
• The Switzerland CPI showed the inflation rate remaining
  within the SNB 0-2% target band.
• The Unemployment Rate matched the previous reading hovering
  at cycle lows.
• The Manufacturing PMI remained in strong contraction.
• The market expects the SNB to keep
  rates steady at the next meeting.

USDCHF Technical Analysis –
Daily Timeframe

On the daily chart, we can see that the USDCHF pair
took off as the SNB went on the sidelines and the FOMC surprised with a more
hawkish than expected dot plot. This price action is not the best as parabolic
movements generally end in a big correction, which is something that the buyers
would love to see at the moment. The break of the swing high at the 0.9144
level has opened the door for a rally into the next swing level at 0.9442. The
trend remains clearly bullish though and the buyers are likely to pile in at
every pullback.

USDCHF Technical Analysis –
4-hour Timeframe

On the 4-hour chart, we can see that we have a
minor upward trendline which
would be a really good support for the buyers
in case we get a big correction, although it’s hard to envision it at the
moment. It seems like only a meaningful fundamental catalyst can provide such a
big pullback which might be a weak US Jobless Claims report or much higher than
expected Swiss inflation data.

USDCHF Technical Analysis –
1-hour Timeframe

On the 1-hour chart, we can see that we
have a divergence with
the MACD which
is generally a sign of weakening momentum often followed by pullbacks or
reversals. The recent price action has also formed what looks like a rising wedge, which
is a reversal pattern. If the price breaks below the bottom trendline, the
sellers are likely to pile in and target the base of the pattern around the
0.9030 level. The buyers, on the other hand, are likely to step in on the
bottom trendline where there’s also confluence with
the support and the red 21 moving average.

Upcoming Events

Tomorrow we
will see the latest US Jobless Claims data, which continues to be very
important for the Fed and the market. Strong data should keep on supporting the
USD, while weak readings are likely to weigh on the greenback in the short
term. On Friday, we conclude the week with the latest US PCE report.