After a string of higher lows and finally overcoming offers layered above the 50DMA on Thursday, USD/CHF bulls are now eyeing overhead resistance at .7873. The level has been tested on multiple occasions since October but has only managed to make one break stick, making it an obvious reference point when assessing setups in the pair.
A break and close above the level would bolster confidence that the recovery from the multi-year lows set in January may have further to run, especially if the high from the false breakout on March 3 is taken out. If that eventuates, longs could be set above .7973 with a stop below, targeting the 200-day moving average initially.
Momentum indicators favour long setups over shorts, with RSI (14) trending higher above 50 while MACD has poked its head into positive territory after crossing the signal line. It’s a mildly bullish message, but not a definitive one just yet.
Should we see another failure at .7873, the setup could be flipped with shorts set beneath the level with a stop above, targeting the 50DMA or .7750. For now, the uptrend from the start of March is more of a reference than a level of importance.
The playbook during the Iran crisis is to favour the USD should energy prices continue to place upward pressure on Treasury yields, meaning developments on the geopolitical front remain important when assessing either setup.
On the data front, US economic activity will likely be the focus later in the session unless we see an unusual surprise from the core PCE deflator when the January report is released. A hot 0.4% monthly reading is expected, so weakness in incomes or spending, or the separate JOLTS report, may prompt a rethink as to whether the energy-led unwind in Fed rate cut pricing this year has perhaps gone too far, undermining the case for holding long dollar positions. If accompanied by an undershoot in the core deflator, that may prove particularly powerful, just as a string of upside surprises would only add to the bullish case for USD.
Good luck!
DS
A break and close above the level would bolster confidence that the recovery from the multi-year lows set in January may have further to run, especially if the high from the false breakout on March 3 is taken out. If that eventuates, longs could be set above .7973 with a stop below, targeting the 200-day moving average initially.
Momentum indicators favour long setups over shorts, with RSI (14) trending higher above 50 while MACD has poked its head into positive territory after crossing the signal line. It’s a mildly bullish message, but not a definitive one just yet.
Should we see another failure at .7873, the setup could be flipped with shorts set beneath the level with a stop above, targeting the 50DMA or .7750. For now, the uptrend from the start of March is more of a reference than a level of importance.
The playbook during the Iran crisis is to favour the USD should energy prices continue to place upward pressure on Treasury yields, meaning developments on the geopolitical front remain important when assessing either setup.
On the data front, US economic activity will likely be the focus later in the session unless we see an unusual surprise from the core PCE deflator when the January report is released. A hot 0.4% monthly reading is expected, so weakness in incomes or spending, or the separate JOLTS report, may prompt a rethink as to whether the energy-led unwind in Fed rate cut pricing this year has perhaps gone too far, undermining the case for holding long dollar positions. If accompanied by an undershoot in the core deflator, that may prove particularly powerful, just as a string of upside surprises would only add to the bullish case for USD.
Good luck!
DS
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Informacje i publikacje nie stanowią i nie powinny być traktowane jako porady finansowe, inwestycyjne, tradingowe ani jakiekolwiek inne rekomendacje dostarczane lub zatwierdzone przez TradingView. Więcej informacji znajduje się w Warunkach użytkowania.