FundamentalOverview

The USD is losing ground againstthe major currencies as the market continues to price in more easing by the endof the year. The market is now expecting three rate cuts by the end of the yearwhich is in stark contrast to just one seen a couple of weeks ago.

The US data recentlystarted to miss expectations by a big margin and the market reacted byadjusting its growth expectations. The Trump’s tariffs policy is also weighingon growth expectations increasing the likelihood of faster Fed easing down the road.

One constraint the Fedmight have could come from higher inflation expectations. In case we get aslowdown, the Fed might not be fast enough in cutting rates amid inflationremaining 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.

On the CHF side, nothinghas changed fundamentally although the recent strength in the Swiss Franc dueto risk-off flows solidified markets expectations for a 25 bps cut in March andincreased the total easing seen by year-end from 35 bps to 40 bps. Tomorrow, wehave the Swiss CPI report which might influence interest rates expectations.

USDCHFTechnical Analysis – Daily Timeframe

On the daily chart, we cansee that USDCHF broke once again below the key 0.8960 support zone on the back of renewed tariffs fears. Thesellers piled in on the break to extend the drop into the 0.87 handle next. Thebuyers, on the other hand, will want to see the price rising back above the0.8960 level to start targeting new highs.

USDCHF TechnicalAnalysis – 4 hour Timeframe

On the 4 hour chart, we cansee that the price is now bouncing near the 0.8910 low. This is where we can expectthe buyers to step in with a defined risk below the low to position for a rallyback into the 0.8960 level. From a risk management perspective, the sellers wouldbe better off waiting for the pullback into the 0.8960 level to pile back infor a move into new lows.

USDCHF TechnicalAnalysis – 1 hour Timeframe

On the 1 hour chart, there’snot much else we can add here as the buyers will look for a bounce into the0.8960 level, while the sellers will wait for the opportunity to short atbetter levels. The red lines define the average daily range for today.

UpcomingCatalysts

Today the market participants will be onthe lookout for tariffs headlines as they go into effect for Canada, Mexico andChina. Tomorrow, we have the Swiss CPI, the US ADP and the US ISM Services PMI.On Thursday, we get the latest US Jobless Claims figures. On Friday, weconclude the week with the US NFP report.