U.S. Overnight Forex Preview: USD/CHF Breaks Support

Due to the holiday trading hours in observance of Martin Luther King Jr. day, it has been a quiet U.S. forex session. The lead story has been the weak USD and strong commodity pricing. Gold and WTI crude oil have posted considerable gains amid abbreviated futures trading.

The coming 24 hours are likely to pick up the action. Several important economic events are scheduled, so let’s break them down:

Country                                Event

New Zealand                          Electronic Card Retail Sales (Dec.)

Japan                                       All Industry Activity Index (Nov.)

E.U.                                          Harmonised Index Of Consumer Prices (Dec.)

U.K.                                          CPI (Dec.), PPI (Dec.)

U.S.                                          NY Empire State Manufacturing Index (Jan.)

The inflation numbers coming out of the E.U. have the potential to drive Euro valuations directionally. If they outperform expectations, ECB action may be imminent. Any tightening or hawkish tone from the ECB will add fuel to EUR/USD valuations, possibly extending the recent bullish trend.

USD/CHF Technicals

Last Friday’s counter-trend trading plan for the USD/CHF was ill-fated amid yesterday’s run to safe-havens. Price bounced from the macro support area .9656 briefly before continuing the prevailing bearish trend.

The long from .9657 outlined in the trading plan produced only a moderate 18 pip gain before being swept out to the bear. A retracement to .9675 was the high water mark before price ran to the stop out point.

Overview: Today’s close will be a big one for the Swissy. Going into the overnight economic data releases, a concrete daily low may provide an opportunity to sell a Fibonacci retracement level with the prevailing trend.

Stay tuned for details on how to capitalize on the action during tomorrow’s U.S. session.