Global market volatility has shifted to the Asian session of late, prodded along by a surprise announcement Reserve Requirement Ratio cut out of China and the latest economic musings from the RBA. Meanwhile, the European and North American session have been rather lackluster to begin this week, with most major currencies simply consolidating in their established ranges.
One under-the-radar pair that has seen a bit of action in the first 36 hours of the trading week is USD/CHF. After following a bearish trend line lower throughout last week, the unit found a floor near key previous/psychological support at .9500 and has now broken above its near-term bearish trend line. The secondary indicators are also improving, with the MACD nearing the “0” level and the RSI bouncing back into neutral territory around 50.
As always, a break of a bearish trend line doesn’t necessarily signal an immediate shift to a bullish trend; instead we may see a sideways trend or even a less aggressive downward trend form, but there is no doubt that the near-term technical outlook on USD/CHF is more optimistic than it was at any point last week. Moving forward, the 38.2% Fibonacci retracement of last week’s drop at .9635 will be key: if rates can break conclusively above that barrier, a continuation to above .9700 becomes more likely. At this point, only a break below strong previous support at .9500 would shift the bias back in favor of the bears.
Key Economic Data / News That May Impact USD/CHF This Week (all times GMT):
- Wednesday: US Existing Home Sales (14:00)
- Thursday: Swiss Trade Balance (6:00), US Initial Unemployment Claims (12:30), US Flash Manufacturing PMI (13:45), US New Home Sales (14:00)
- Friday: US Durable Goods Orders (12:30)
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