Fundamental
Overview
The USD last week got a
boost from the strong US Consumer Confidence data which triggered an aggressive
rise in long term Treasury yields. The report however just showed that the
labour market remains resilient which is good news for growth and not
necessarily bad news for inflation. Eventually, both the Treasury yields and
the greenback gave back the gains as it became clearer that the price action got
impacted more by the month-end flows rather than a fundamental driver.
The CHF, on the other hand,
got a boost from SNB’s
Jordan comments where he said that if upward risks to Swiss inflation were
to materialise, these would most likely be associated with a weaker franc,
which could be counteracted by selling foreign exchange reserves (buying CHF).
On top of that, we got a selloff in the US Dollar across the board as the risk-on
sentiment returned.
USDCHF
Technical Analysis – Daily Timeframe
USDCHF Daily
On the daily chart, we can
see that USDCHF sold off all the way back to the key support
around the 0.90 handle. This is where we can expect the buyers to step in with
a defined risk below the support to position for a rally into the 0.9250 level.
The sellers, on the other hand, will want to see the price breaking lower to
invalidate the bullish bias and increase the bearish bets into the 0.88 handle.
USDCHF Technical
Analysis – 4 hour Timeframe
USDCHF 4 hour
On the 4 hour chart, we can
see that we have an important zone around the 0.91 handle where the price reacted
to several times in the past few weeks. If the pair gets there, we can expect
the sellers to lean on that resistance zone with a defined risk above it to
position for a break below the 0.90 support with a better risk to reward setup.
The buyers, on the other hand, will want to see the price breaking higher to
increase the bullish bets into the 0.9250 level.
USDCHF Technical
Analysis – 1 hour Timeframe
USDCHF 1 hour
On the 1 hour chart, we can
see that we have the upper limit of the average
daily range right around the most recent swing high level at 0.9070. This
should strengthen the case for a strong resistance around the 0.9070 and 0.9100
price region ahead of the Swiss CPI release and give the sellers a good point
where to lean on. The buyers will need to break above that zone to turn the
bias around and extend the rally into new highs.
Upcoming
Catalysts
Today we have the US ISM Manufacturing PMI. Tomorrow, we get the Swiss CPI
and the US Job Openings data. On Wednesday, we have the US ADP and the US ISM
Services PMI. On Thursday, we get the latest US Jobless Claims figures, while
on Friday we conclude the week with the US NFP report.
A downside
surprise in the Swiss CPI should see the market getting a bit more confident
for another rate cut in June and might weigh on the currency in the short-term.
On the other hand, an upside surprise might give the Swiss Franc a bigger boost
as the market should price out both the chances of a rate cut in June and
expect the central bank to prop up the currency.