US data continued to surprise to the upside since the last FOMC meeting, leading the market into a hawkish path for interest rates as Fed members and especially Fed Chairman Powell reiterated that they expect two or more rate hikes this year if the economy remains strong. Of course, a lot will depend on the next NFP and CPI reports, but until the data shows strength, the Fed should remain hawkish and the USD should strengthen.
On the other hand, the SNB raised interest rates by 25 basis points as expected at the last meeting and communicated that further rate increases cannot be ruled out. The Swiss CPI this week’s data showed the inflation rate moving back into the SNB’s target band and should mean the SNB may wait and see how things play out at the next meeting.
USDCHF Technical Analysis – Daily Time Frame
On the daily chart, we can see that USDCHF has started to move between the 0.89 and 0.90 levels, although the bias remains bearish as moving averages are crossed to the downside and sellers are leaning on the 21 red moving average to target the 0.8858 support. Now it’s more about the data as the tightening cycle for many central banks nears its end. Of course, a break of the red 21 moving average should be a bad sign for sellers, as buyers may gain even more upside conviction to the 0.9122 resistance.
USDCHF Technical Analysis – 4 Hour Time Frame
On the 4-hour chart, we can see the price movement more clearly in the range between the 0.89 and 0.90 levels. We can also note that the price was printing higher lows and trying to break above the 0.90 resistance, so this should be a signal that buyers have more strength and that we may see a breakout to the upside soon.
USDCHF Technical Analysis – 1 Hour Time Frame
On the 1-hour chart, we can see that there is really nothing to do here at this point but wait for a breakout on either side. Rangebound markets kill many traders because patience is key in such environments. A break to the upside should lead to a rise in resistance at 0.9122, while a break to the downside should open the door for a new lower low to the 0.86 handle.
We will get many top tiers in the coming days economic indicators like tomorrow’s US Jobless Claims and ISM Services PMI and the main event of the week: US NFP on Friday. Again, strong data should push the dollar higher, while weak readings should weaken the dollar.