Fundamental Overview
The USD got a boost from the
FOMC decision as the market perceived it as more hawkish than expected. Overall, apart from some slight tweaks, the Fed matched the market’s pricing. Nonetheless, the market reacted in a big way pushing Treasury yields higher and giving the USD a tailwind.
The data is what really matters now as it will decide what the Fed is going to do. They switched their focus on inflation again, so it will likely take just one soft CPI report in January to see the market reacting in a dovish way sending Treasury yields and the US Dollar lower.
On the CHF side, the
SNB cut interest rates by 50 bps bringing the policy rate to 0.50% and dropped 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 next year.
USDCHF Technical Analysis – Daily Timeframe
On the daily chart, we can see that USDCHF extended the rally into the 0.90 handle following the FOMC decision but eventually erased most of the gains. 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 another minor upward trendline defining the current bullish momentum on this timeframe. The buyers will likely keep on leaning on it with a defined risk below it to position for new highs, while the sellers will look for a break lower to pile in for a pullback into the major trendline.
USDCHF Technical Analysis – 1 hour Timeframe
On the 1 hour chart, we can see that we have a minor counter-trendline defining the current pullback into the minor trendline. The buyers will want to see the price breaking above the counter-trendline to increase the bullish bets into the 0.9050 level, while the sellers will likely lean on it to position for the break below the minor trendline and target the major trendline. The red lines define the
average daily range for today.
Upcoming Catalysts
Today, we conclude the week with the US PCE data.
This article was written by Giuseppe Dellamotta at
www.forexlive.com.
