USDCHF Technical Analysis – Tariffs talk keeps the market on edge

Fundamental
Overview

The USD has been marginally
weaker recently due to lower than expected US inflation figures last week that
sent Treasury yields lower and made the market to price in higher chances of a
second rate cut by the end of the year.

Yesterday, the greenback
weakened across the board following a WSJ report saying that Trump would lay out the
trade vision but won’t impose tariffs yet. Tonight though, he spoke to the
media and said that he intends to impose 25% tariffs on Canada and Mexico next week. Following
the news, the US Dollar erased almost all the losses from the prior day.

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 Swiss CPI last week 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 lean on the trendline to position for a drop into the major
trendline, 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 we have a strong minor resistance zone around the 0.91 handle. The
sellers will likely step in around these levels to target the major trendline,
while the buyers will look for a break higher to position for a rally into the downward
trendline targeting a break above it. The red lines define the average daily range for today.

Upcoming
Catalysts

This week is pretty empty on the data front with just a couple
of key releases scheduled for the latter part of the week. On Thursday, we get
the latest US Jobless Claims figures, while on Friday we conclude the week with
the Flash PMIs.

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