USDCHF Technical Analysis: Delving into the Forex Market Curiosity

USDCHF Fundamental Analysis

US

• The Fed left interest rates unchanged as expected at the last meeting.
• The macroeconomic projections were revised higher, and the Dot Plot showed that the FOMC still expects another rate hike by the end of the year with less rate cuts projected in 2024.
• Fed Chair Powell reaffirmed their data dependency but added that they will proceed carefully.
• The US Core PCE last week came in line with expectations, so the market’s pricing barely changed.
• The labour market remains pretty resilient but we are starting to see some weakness as Continuing Claims missed expectations once again last week pointing to an upward trend.
• The US Retail Sales recently beat expectations by a big margin with positive revisions to the prior figures, suggesting the consumers’ spending remains solid.
• The recent US PMIs showed that the economy now looks more balanced.
• The US Employment Cost Index yesterday showed that wage growth picked up in Q3.
• The US Consumer Confidence fell for the third consecutive month although the data beat expectations.
• Fed Chair Powelland other FOMC members continue to highlight the rise in long term yields as doing the job for the Fed and therefore they are expected to keep rates steady this week.
• 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 latest Switzerland CPI showed again that 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 saw a notable bounce back although it remains in 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 bounced around the 0.89 handle and rallied all the way up to retest the broken trendline. Yesterday, the pair surged probably because of month-end flows and the price got a bit overstretched as depicted by the distance from the blue 8 moving average. In such instances, we can generally see a pullback into the moving average or some consolidation before the next move.

USDCHF Technical Analysis – 4-hour Timeframe

On the 4-hour chart, we can see that the price is starting to struggle a bit around the broken trendline. We can expect the sellers to step in here with a defined risk above the trendline to position for a drop into the minor trendline and the 0.90 support. The buyers, on the other hand, are likely to lean on the minor trendline where they will also find the confluence with the red 21 moving average and the 61.8% Fibonacci retracement level.

USDCHF Technical Analysis – 1-hour Timeframe

On the 1-hour chart, we can see more closely the bullish setup around the 0.9050 level. A bounce might lead to another rally into new highs, while a break lower should trigger a selloff as the sellers will increase the bearish bets and target a new low.

Upcoming Events

This week, we will get lots of tier one data points with the US labour market and the FOMC decision in focus. Today we will get the US ADP, the ISM Manufacturing PMI, the Job Openings data and the FOMC rate decision. Tomorrow, we will see the Switzerland CPI report and the US Jobless Claims data, while on Friday we conclude the week with the US NFP report and the ISM Services PMI.