The Greenback has kicked the week off with mixed performance across the majors. Slight losses vs the euro and British pound have been offset by a steep rally against the CAD. Meanwhile, the safe-havens have been relatively flat. Tight trading ranges in the USD/CHF, USD/JPY, and XAU/USD continues to be evident.
On the economic news front, it’s been a quiet Monday session. Perhaps the biggest takeaway has been the Fed’s ongoing dovish policy. A quick review of the CME’s FedWatch Index still shows a 100% chance of interest rates holding at 0.0-0.25% until at least next March. Also, this morning’s falling yields on the 3 and 6-month T-bills suggest that the Fed remains committed to aggressive open market operations. Both issues aren’t good news for the USD, which is holding near yearly lows.
For the USD/CHF, some bullish traction is being found near the 0.9100 handle. Will it last? Let’s take a look at the weekly technicals and break down today’s action.
USD/CHF Attempts To Hold The Line At 0.9100
In a Live Market Update from early August, I broke down 0.9000 as being a potentially strong area of support. Thus far, the level has proven valid, with rates bouncing 100 pips since a test of this area last week.
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Here are the key levels to watch in this market for the near future:
- Resistance(1): 38% Retracement, 0.9296
- Two-Way Catalyst: Psyche Level, 0.9100
- Support(1): Spike Low, 0.9009
Overview: For the time being, a bearish bias is warranted for the USD/CHF. However, if we see rates break north from 0.9100, a test of 0.9296 may develop by early September.
In the event that the Greenback does rally, a shorting opportunity in USD/CHF may set up in the coming weeks. Nonetheless, the rest of August is very likely to bring intense consolidation between 0.9100 and 0.9000.
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