Analyzing USDCHF: A Technical Perspective | Forexlive

US

• The Fed left interest rates unchanged as expected 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 recent US Core PCE came in line with expectations.
• The labor market is starting to show some weakness as Continuing Claims are now rising at a fast pace and the NFP data last Friday missed across the board.
• The US Consumer Confidence fell for the third consecutive month although the data beat expectations.
• The US ISM Manufacturing PMI last week missed expectations by a big margin, followed later on Friday with a disappointing ISM Services PMI, although the index remained in expansion.
• The market doesn’t expect the Fed to hike anymore.

Switzerland

• The SNB kept interest rates steady at 1.75% vs. 2.00% expected as the central bank sees the significant tightening in recent quarters countering the remaining inflationary pressures.
• The Switzerland CPI ticked higher recently but the inflation rate is comfortably in the SNB’s 0-2% target band for both the headline and core measures.
• The Unemployment Rate matched the previous reading hovering at cycle lows.
• The Manufacturing PMI missed expectations and fell further into contraction, while the Services PMI remain 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 the USDCHF pair retested the broken trendline around the 0.91 handle where we had also the 61.8% Fibonacci retracement level for confluence. The sellers stepped in to position for a drop into the 0.88 handle and increased the bearish bets as the US labor market data disappointed.

USDCHF Technical Analysis – 4-hour Timeframe

On the 4-hour chart, we can see that the price is now testing a strong resistance zone around the 0.90 handle where we can find the confluence with the downward trendline, the red 21 moving average and the 50% Fibonacci retracement level.

This is where the sellers are likely to step in again with a defined risk above the trendline and target the 0.88 handle. The buyers, on the other hand, will want to see the price breaking higher to invalidate the bearish setup and position for a rally back into the 0.91 handle.

USDCHF Technical Analysis – 1-hour Timeframe

On the 1-hour chart, we can see more closely the bearish setup with the price action now confined between the 0.9020 resistance and the 0.8990 support. More conservative sellers may want to wait for the price to break below the support to increase the bearish bets into the 0.88 handle.

Upcoming Events

This week is pretty empty on the data front with just the US Jobless Claims tomorrow and the University of Michigan Consumer Sentiment on Friday being the only notable events. The market is likely to focus on the US Jobless Claims given the recent weakness in the labor market data.