The USDCHF pair continues its bearish trend, struggling to find a bottom around the 0.90 level. With the Fed due to deliver its monetary policy stance tomorrow, the USD decline remains evident across the board.
The CHF is viewed as a safe-haven currency. If you want, a proxy for risk.
Lately, it remained the only true safe-haven asset on the FX dashboard as the JPY changed dramatically. For most of 2020, risk managers needed to adapt to the new face of the JPY, putting even more pressure on the CHF pairs.
The currency market moves from one event to another with long consolidations in between. Before last week’s ECB decision, it was the NFP, and this week the FOMC Statement is due. In between, little or no price action made it difficult to find trending markets.
It can all change with the Fed tomorrow. The market is focusing on how the Fed communicates its new inflation-based mandate and, more importantly, how it plans to achieve higher inflation.
Classic technical analysis patterns seem to work well with the USDCHF lately. A close look at the 4h timeframe reveals three different patterns that all reached their respective measured move after the breakout came.
In the first instance, the black triangle acted as a reversal pattern. By the time the price broke its lower edge, it did not stop until the measured move (longest leg of the triangle projected from the breakout point) was reached. The same happened in the case of the descending triangle.
Now that the price broke higher from a reversal pattern (i.e., falling wedge), the expectations are that it will go for the measured move. Effectively, it means that bulls may target 0.9350-0.9400 area with a stop-loss order just shy below the 0.90.
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