December 20, 2024 at 10:43AM
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.
