USDCHF Technical Analysis – The risk-off flows boosted the CHF

Fundamental
Overview

The USD continues to be
supported against most major currencies, especially the commodity currencies,
as the markets remain in a risk-off mood following some bad US data releases.
In fact, since last Friday, we got weak US Flash Services PMI, UMich final Consumer Sentiment and this a weak US Consumer Confidence report on Tuesday.

The problem is that we’ve
also got inflation expectations jumping to new highs in both the UMich and the
Conference Board report. The market might be fearing that in case we get a
slowdown, the Fed might not be fast enough in cutting rates amid inflation
remaining above target and uncomfortably high long-term inflation expectations.

This is something to keep
in mind in light of the next NFP and CPI reports coming out before the March
FOMC decision where we will also get the updated SEP and Dot Plot. Today, we
get the US Jobless Claims figures and if we get a new high in the data, then we
can expect another wave of risk-off flows.

On the CHF side, nothing
has changed fundamentally although the recent strength in the Swiss Franc due
to risk-off flows solidified markets expectations for a 25 bps cut in March and
increased the total easing seen by year-end from 35 bps to 39 bps.

USDCHF
Technical Analysis – Daily Timeframe

On the daily chart, we can
see that USDCHF broke below the key 0.8960 support zone recently but the price is now rising back
above it. This is where we can expect the buyers to step in to position for a
rally into the 0.92 handle. The sellers, on the other hand, will want to see
the price falling back below the support again to keep pushing into the 0.87
handle next.

USDCHF Technical
Analysis – 4 hour Timeframe

On the 4 hour chart, we can
see that the price broke above the downward trendline that was defining the bearish
momentum. The buyers piled in on the break of the trendline and the support
zone to target a deeper pullback into the 0.90 handle. That’s where we can
expect the sellers to step in with a defined risk above the 0.90 handle to
position for the break below the support.

USDCHF Technical
Analysis – 1 hour Timeframe

On the 1 hour chart, we can
see that we have a counter-trendline defining the current pullback. If we get a
pullback into it, we can expect the buyers to lean on the trendline to position
for a rally into new highs, while the sellers will look for a break lower to
increase the bearish bets into the 0.87 handle. The red lines define the average daily range for today.

Upcoming
Catalysts

Today we get the latest US Jobless Claims
figures, while tomorrow we conclude the week with the US PCE data.

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