14 consecutive beats and caused a general USD weakness across the board. The
other details in the report were good though, with the unemployment rate
falling back to 3.6% and the average hourly earnings ticking higher, which is
not what the Fed would want to see. In fact, the market’s expectations for a 25
bps rate hike at the July meeting remained unchanged.
Conversely, the SNB raised
interest rates by 25 bps as expected at the last meeting and communicated that
additional rate hikes cannot be ruled out. The Swiss CPI data though showed the inflation
rate returning back within the SNB target band and should translate into a
pause for the SNB at the next meeting, all else being equal.
USDCHF Technical Analysis –
Daily Timeframe
On the daily chart, we can see that USDCHF sold off
very hard after the miss in the US NFP report. We can notice that the bias was
anyway bearish as the moving averages were
crossed to the downside and the sellers leant on the red 21 moving average to
position for lower prices. The price has now reached the key 0.8760 level,
which is the 2020 pandemic low. We can also see that the price has been diverging with the
MACD for a
long time now, we might see a bottom here and a strong bounce into the 0.90
handle.
USDCHF Technical Analysis –
4 hour Timeframe
On the 4 hour chart, we can see that the breakout
lower of the range supported by the miss in the NFP led to strong bearish
momentum as the sellers started to pile in aggressively. If we get a pullback
here, the sellers should lean on the downward trendline to
position for more downside and the break below the 0.8760 low. The buyers, on
the other hand, should start stepping in here with a defined risk below the
level and target the 0.90 handle. More conservative buyers may want to wait for
the price to break above the trendline before piling in.
USDCHF Technical Analysis –
1 hour Timeframe
On the 1 hour chart, we can see that the
price has been diverging with the MACD falling right into the 0.8760 low. This
is generally a sign of weakening momentum often followed by pullbacks or
reversals. This should reinforce the buyers’ chances of getting a strong bounce
here. The sellers will wait at the trendline and the 38.2% Fibonacci
retracement level to position for more shorts.
Upcoming Events
Today
the market focus will be on the US CPI report. A beat to the expected numbers,
especially on the core side, should support the USD and lead to a rally in
USDCHF as the markets are likely to expect a more hawkish Fed. On the other
hand, a miss to forecasts across the board should lead to more USD weakness
going forward as the market would see less chances of higher rates and may even
bring forward rate cuts odds. We conclude the week with the US Jobless Claims
on Thursday and the University of Michigan Consumer Sentiment report on Friday.
This article was written by FL Contributors at www.forexlive.com.