USDCHF Technical Analysis – The USD finds support from the risk-off sentiment

Fundamental Overview

The USD has been relatively stronger against most major currencies since Friday as the markets went into risk-off following some bad US data release. In fact, we got a weak US Flash Services PMI and soon after the long-term inflation expectations in the Final UMich Consumer Sentiment survey jumped to a new 30-year high.

The risk-off sentiment picked up after the jump in the long-term inflation expectations. 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.

On the CHF side, nothing has changed fundamentally with the market expecting a 25 bps cut in March and a total of 35 bps of easing by year-end.

USDCHF Technical Analysis – Daily Timeframe

On the daily chart, we can see that USDCHF is trading at the key 0.8960 support zone. This is where we can expect the buyers to step in with a defined risk below the support to position for a rally into the 0.92 handle. 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 downward trendline defining the bearish momentum. The sellers will likely continue to lean on it to keep pushing into new lows, while the buyers will look for a break higher to increase the bullish bets into new highs.

USDCHF Technical Analysis – 1 hour Timeframe

On the 1 hour chart, there’s not much else we can add here as the buyers will continue to step in around the support, while the sellers will look for a break lower. The red lines define the average daily range for today.

Upcoming Catalysts

Today we have the US Consumer Confidence report. On Thursday, we get the latest US Jobless Claims figures, while on Friday we conclude the week with the US PCE data.