Talking Points:
- USD/CHF has continued to show strength even with a persistently-weak US Dollar, and the pair rallied up to a fresh two-month high last week ahead of Non-Farm Payrolls out of the United States.
- USD/CHF is continuing a pullback that started last Friday after that disappointing NFP report, and the pair is fast-approaching a couple of areas of prior higher-low support around .9550 and .9520. Will bulls respond to produce a higher-low above the .9500 psychological level?
USD/CHF STRENGTH CONTINUES EVEN AS USD-WEAKNESS REMAINS PERVASIVE
While a bearish US Dollar has remained prominent in some form or the other in many major currency pairs, USD/CHF has shown very little weakness as the pair has continued to rally up to fresh monthly highs. Last week saw that strength continue up to the .9650 level to set a fresh two-month high. Dollar-weakness on the heels of a disappointing NFP report on Friday helped to produce a pullback, and as we open up a fresh week, the pair is continuing to pull lower after last week’s bullish breakout.
As we move deeper into this week, a couple of pertinent items out of the US are likely to keep the Dollar volatile. On Wednesday, we get March inflation numbers in the morning and later in the day we get the release of FOMC minutes from last month’s rate hike. After that – we begin to wade into US corporate earnings for last quarter, and this can keep the Dollar in the spotlight as expectations for earnings growth this quarter out of the US is very high.
In USD/CHF, the primary theme appears to be one of continuation. The pair has put in a rather sharp rally after setting fresh two-year lows in mid-February, and strength in the pair has largely continued ever since. For those looking at bullish plays in the US Dollar, or for those looking for ways to offset short-USD exposure from other setups, the long side of USD/CHF can remain as attractive if we stay above the .9500 psychological level.
On the below four-hour chart, we’re focusing in on the recent bullish advance, highlighting the two prior higher-low swings of support around .9550 and .9520. If we break back-below the psychological level of .9500, the bullish theme comes into question, and if we break-below the .9420 area of prior resistance/recent support, the bullish bias could be abandoned in favor of short-side setups in the pair.