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Trading Outlook – USD/CHF

Jarratt Davis
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Originally updated: 07:30

Trading Bias: LONG

Currency pair: USD/CHF

Current Sentiment: Bullish

In today’s trading session we will be focussing on buying opportunities on the USD/CHF.

Fundamentals:

US Labour market data was far better than expected on Friday with only average earnings ticking slightly lower, thus removing another hurdle for the Fed to tighten policy as we inch closer to a US rate hike. We can expect continued strength on the USD moving forward as the market speculation refocuses on the timing of said hike.

News has circulated over the weekend that the Swiss National Bank might cut its deposit rate, currently from -0.75% to -1.5%, should the currency move in the “wrong direction”. We know that the SNB in conjunction with the Swiss government want to see the EURCHF pair at 1.10.

Any intervention on the EURCHF pair would weaken the CHF across the board, in which case we want to take advantage of any softening of the CHF against the USD. USDCHF being the safest bet as the USD is currently fundamentally strong and surrounded by positive sentiment.

Technicals:

We expect this pair to rally off during today’s session.

There is strong support at 0.9815 – 0.9825 which could provide trading opportunities should the price pull back. Look for the price to bounce off this level if it retraces back to it.

Remember to be aware of intra-day news as this can very often change the sentiment which makes our trade weaker. Look for any news that could be negative for this pair, which would change the sentiment to bearish.

Other Market Moving News:

Overnight AUD softened from cross-related selling against EUR and JPY, sending AUDUSD briefly below 0.7700. This followed the Chinese trade balance which showed imports fall the most since the global financial crisis.

NZD also trades on the back-foot after New Zealand PM said the RBNZ is looking at new tools so they don’t have to tighten, ahead of Wednesday’s rate decision.

On today’s calendar we have the Eurogroup meetings where EU Finance Ministers will discuss recently submitted Greek reforms and QE which is due to begin today.

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