FundamentalOverview

The USD has been overallrangebound in the last couple of weeks. The last week’s strength might havebeen influenced more by quarter-end flows rather than something fundamental asthe economic data didn’t change interest rates expectations. Nonetheless, allelse being equal, the data should continue to support the risk sentiment amid apickup in growth without inflationary pressures and that could weigh on the US Dollar eventually.

The CHF, on the other hand,weakened a lot as the SNB cutrates by 25 bps bringing the policy rate to 1.25%. Now, the rate cut wasn’treally a surprise as the market was already pricing a 68% chance going into theevent. What added to the Swiss Franc weakness was the central bank lowering itsinflation forecasts.

The onlything bullish for the CHF was the line saying that the SNB “will be ready tointervene in FX market if needed and as necessary”, but we already knew thatfrom the Chairman Jordan’s comments,and they won’t do it unless inflation surprises to the upside or they see risksof inflation overshooting their projections.

USDCHFTechnical Analysis – Daily Timeframe

On the daily chart, we cansee that USDCHF rallied strongly following the SNB decision and the price isnot near the key trendlinearound the 0.9050 level. This is where we can expect the sellers to step inwith a defined risk above the trendline to position for a drop into new lows.

The buyers, on the otherhand, will want to see the price breaking higher to increase the bullish betsinto the highs.

USDCHF TechnicalAnalysis – 4 hour Timeframe

On the 4 hour chart, we cansee that we have a minor trendline now defining the current bullish momentum.If we get a pullback from the major trendline, we can expect the buyers to leanon the minor trendline with a defined risk below the 0.90 handle to positionfor a break above the major trendline with a better risk to reward setup.

The sellers, on the otherhand, will want to see the price breaking below the minor trendline and the 0.90handle to turn the bias more bearish and increase the bets into new lows.

USDCHF Technical Analysis – 1 hour Timeframe

On the 1 hour chart, we cansee that we have also the 50% Fibonacci retracement level around the minortrendline. This should technically strengthen the support zone and give thebuyers a good level where to lean on.

The sellers will need theprice to fall below the 0.90 handle to invalidate the bullish setup andincrease the bearish bets into new lows. The red lines define the average daily range for today.

UpcomingCatalysts

Today we have the US Job Openings and Fed Chair Powell speaking. Tomorrow, weget the US ADP, the US Jobless Claims, the US ISM Services PMI and the FOMCMeeting Minutes. On Thursday we will get the latest Swiss CPI figures and it’salso going to be a US Holiday for Independence Day. Finally, on Friday, weconclude the week with the US NFP report.