- Summary:
- USDCHF looks poised to move higher as both fundamental and technical analysis support a bullish case. The US stock market and the NFP are critical.
The USDCHF looks like it had bottomed recently. The move lower to the 0.90 level was met only with buying orders.
From both a technical and fundamental perspective, the pair looks poised to gain from here. The only thing that threatens the bullish perspective is the possibility that safe-haven currencies like the CHF will be in demand should the stock market in the United States drops.
ECB to Expand Its Quantitative Easing Program
One of the most important pieces of economic data out of Eurozone was released today – the CPI flash estimate for the month of September. All eyes were on the core data, as the ECB monitors it and sets the monetary policy based on it.
The month before, the core inflation came at 0.4%. This time it dropped even further, to 0.2%, on expectations that it will bounce to 0.5%.
What is the connection with the USDCHF, you may ask? Well, the answer comes from the ECB, as it is poised to increase the QE this year. Thus, it will put pressure on the Swiss National Bank to act to support the CHF.
USDCHF Technical Picture
One reason, therefore, comes from the fundamental part, as explained above. The other two belong to technical analysis.
At the 0.90 level, the USDCHF made a double bottom, already confirmed by the market, as it reached its measured move. If that is not enough, the pair broke higher after a falling wedge formation. After the break, it retested the wedge, confirming the bottom.
As an extra reason to be bullish, the current price action finds support at previous horizontal resistance. Therefore, yet another reason to get onboard on the long side.
Bulls may want to trade at market and target a new marginal high above 0.9350 with a stop loss order at 0.9130. Aggressive bulls may tighten the stop and trail the price action to make the most of the upcoming bullish trend.
USDCHF Forecast
