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.