number exceeded expectations, there was also a notable increase in unemployment
and a decline in average weekly hours. These less favourable details led to a
weakening of the USD as the market began to reassess its hawkish expectations
and adopt a more cautious stance. The ISM Services PMI added to the subdued sentiment,
falling short of expectations, particularly in the prices paid sub-index, which
sparked hopes of a potential decline in core inflation.
Shifting focus to jobless claims, there was a significant deviation
from the expected number. However, seasonal adjustments were cited as the
likely culprit. On a positive note, continuing claims demonstrated further
improvement, suggesting that individuals are finding new employment relatively
quickly after experiencing a period of unemployment.
Overall, the previously hawkish
sentiment observed in May has started to fade, as evident from the recent
change in the outlook of Federal Reserve members. They have expressed a
preference for a cautious approach and avoiding significant actions during the
upcoming FOMC meeting. The latest set of data supports their concerns and
justifies their restrained approach but as we have seen yesterday with the US CPI report, core inflation remains stubbornly
high, and the month-over-month rate is stuck at 0.4%.
USDCHF Technical Analysis –
Daily Timeframe
On the daily chart, we can see that the rally in
USDCHF has stalled at a key resistance level at
the 0.91 handle. The moving averages are
still crossed to the upside indicating a bullish bias, but they are on the
verge of a crossover as the price keeps ranging. This may turn into a bullish flag
consolidation if the price confirms it breaking above the 0.91 resistance. The
target for the buyers will be the 0.94 handle. This will depend on the next set
of economic data. If they are strong, the USD is likely to rally, but if they
are weak the USD should weaken even more.
USDCHF Technical Analysis –
4 hour Timeframe
On the 4 hour chart, we can see that the price has
recently broke out of the upward trendline that
acted as a strong support in the past month. The strong move after the break
was also helped by hawkish comments from the SNB’s Governor Jordan.
Technically, the price has made a new lower low in that case, so the structure
on this timeframe turned bearish, but we will need a confirmation from the data
to start seeing more follow through and the USDCHF pair falling into the 0.8858
support.
USDCHF Technical Analysis –
1 hour Timeframe
On the 1 hour chart, we can see that we
have two levels to watch: the 0.9073 high and the 0.9032 low. We are likely to
range here trading into the FOMC rate decision and we might even see some
spikes that could lead to fakeouts once the Fed event gets underway, but a
break on either side should show what is the prevailing sentiment. A break to
the upside should take the USDCHF pair to the 0.91 resistance, while a break to
the downside should result in a move towards the 0.8980 low.
Today we have the FOMC rate decision to watch and in
the next days the highlights are the US Jobless Claims report on Thursday and
the University of Michigan consumer sentiment survey on Friday. Beware that the
last time the consumer sentiment survey impacted the market heavily as long
term inflation expectations showed a big jump to the upside, so another
increase may give the USD a boost while a big miss should weaken it.
This article was written by ForexLive at www.forexlive.com.