UPDATE: The USDCHF currency pair has surged following positive comments from former President Donald Trump regarding US-China relations, raising hopes for a trade thaw. As of July 15, 2023, the US dollar shows signs of recovery, bouncing back from recent cycle lows.
This shift comes as US Treasury yields rebound, erasing losses from Thursday. However, the overall performance of the US dollar remains mixed, heavily influenced by rapid fluctuations in market risk sentiment since Trump’s threats of tariffs. The ongoing US government shutdown is delaying critical economic reports, amplifying uncertainties in the market.
The upcoming release of the US Consumer Price Index (CPI) report today is particularly significant. Despite the shutdown, analysts are eager to see how inflation trends will impact the dollar’s strength. Any unexpected results could sway market reactions, especially in light of the fragile US-China relations. If negative developments arise, economic growth fears may overshadow inflation concerns.
On the Swiss franc side, the Swiss National Bank (SNB) has maintained its interest rates and provided no forward guidance in its last meeting. President Thomas Schlegel indicated that it would take significant changes to prompt any further rate cuts, as the central bank seeks to maintain its inflation target of 2%.
Recent inflation figures in Switzerland have shown slight improvement, but analysts agree that the CHF’s movement is largely driven by global risk sentiment rather than domestic economic indicators.
Chart analysts note that the USDCHF broke below a significant upward trendline last week, reaching a low of 0.7872. Following Trump’s comments, the pair has shown a bounce back. If the price falls again, buyers are expected to step in around 0.7872 with a defined risk below that level, targeting a potential rally to 0.8073. Conversely, sellers will push for lower levels if the currency pair breaks below key support.
On the intraday charts, the bearish momentum is evident, with sellers likely to capitalize on resistance around 0.7935. Buyers will need a breakout above this resistance to encourage bullish bets for new highs. The average daily range indicates heightened volatility as traders remain focused on US-China developments and the impact of today’s US CPI and flash PMIs.
The market is poised for significant shifts as the day unfolds. With the US CPI report on the horizon and trade negotiations teetering, investors and traders alike are closely monitoring these developments for their next moves.
