USDCHF Technical Analysis – Tariffs headlines keep the volatility high

Fundamental
Overview

The USD opened higher today
and continued to dominate throughout the Asian session as we got once again
some tariffs headlines that weighed on the risk sentiment. In fact, late
yesterday Trump announced that he will impose 25% tariffs and sanctions on Colombia
because they refused to take the deported
migrants.

Colombia retaliated soon after by imposing 25% tariffs
on US imports. Late in the Asian session though, we got the news that the US
will hold the tariffs and sanctions in reserve as Colombia accepted the illegal
migrants returned from the US. That saw the US Dollar getting weaker again and
the fall in Treasury yields caused by the stock market selloff weighed on the
greenback further.

On the CHF side, nothing
has changed for now. As a reminder, the SNB cut interest rates by 50 bps at the last
policy meeting bringing the policy rate to 0.50% and dropping the language
signalling further cuts in the coming quarters.

This suggests that the
central bank will likely slow the pace of easing which is something that the
market was already expecting with two 25 bps cuts priced in for this year. The
recent Swiss CPI didn’t change much for the central
bank as the data came basically in line with expectations.

USDCHF
Technical Analysis – Daily Timeframe

On the daily chart, we can
see that USDCHF continues to pull back with the major trendline being eyed as
the first target. From a risk management perspective, the buyers will have a
better risk to reward setup around the trendline. The sellers, on the other hand,
will want to see the price breaking lower to increase the bearish bets into the
0.87 handle next.

USDCHF Technical
Analysis – 4 hour Timeframe

On the 4 hour chart, we can
see that we have a minor downward trendline defining the current pullback. The
sellers will likely continue to lean on the trendline to keep pushing into new
lows, while the buyers will look for a break higher to start targeting new
highs.

USDCHF Technical
Analysis – 1 hour Timeframe

On the 1 hour chart, we can
see that the price broke below the minor support around the 0.9030 level. The
sellers increased the bearish bets into the trendline, while the buyers will need to wait for the price to rise back above the level
to position for a break above the downward trendline. The red lines define the average daily range for today.

Upcoming
Catalysts

Tomorrow we get the US Consumer Confidence data. On Wednesday,
we have the FOMC Policy Decision. On Thursday, we get the US Q4 GDP report and
the latest US Jobless Claims figures. On Friday, we conclude the week with the
US PCE and the US Employment Cost Index.

This article was written by Giuseppe Dellamotta at www.forexlive.com.