USD/CHF Rejects Key Macro Resistance Level

With a little over 24 hours to go in the trading week, the Greenback is laboring vs the majors. Losses against the euro EUR/USD (+0.39%), pound sterling GBP/USD (+0.43%), and Swiss franc USD/CHF (-0.39%) are the headliners. For the USD/CHF, the negative price action has held rates beneath a key macro Fibonacci resistance level.

Today’s economic calendar was active, featuring reports facing U.S. construction, manufacturing, and labour. Here’s a quick look at the highlights:

Event                                                                         Actual               Projected          Previous

Housing Starts (MoM, Dec.)                                    5.8%                     NA                      3.1%     

Initial Jobless Claims (Jan. 16)                                900K                    910K                   926K

Continuing Jobless Claims (Jan. 9)                        5.054M                5.400M              5.181M

Philadelphia Fed Manufacturing Index (Jan.)       26.5                      12.0                     9.1

All in all, this is a pretty good set of numbers. Jobless Claims are down modestly, suggesting that the labour market is at least stabilizing. The big takeaway here is the dramatic uptick in the Philly Fed Index. The number tripled December’s figure, a major jump in mid-Atlantic manufacturing. For the first time in a while, Thursday’s economic figures all point in a bullish direction.

So, why the sluggish USD? With sweeping Biden-era stimulus on the horizon, forex players are betting on the US dollar being weak to flat for the immediate future. When coupled with the emergence of new COVID-19 strains, it’s no wonder that USD/CHF valuations are in bearish territory.

USD/CHF Rejects Topside Resistance

The weekly chart below gives us a good look at the intermediate-term performance of the USD/CHF. Moving forward, a bearish bias is warranted as long as price holds beneath the 38% Current Wave Retracement (0.8829).

Here are the key levels to watch for the near future:

• Resistance(1): 38% Current Wave Retracement, 0.8929
• Resistance(2): Weekly SMA, 0.8967
• Support(1): Swing Low, 0.8757

Overview: For the USD/CHF, the weekly chart shows us a clear cut “L” formation. Rates are now in bearish consolidation, suggesting that a test of the Swing Low may be on the way. If this market closes the week below 0.8929, a short-side position trade may set up by 1 February. Stay tuned for details on how to get in on the action.

ABOUT THE AUTHOR See More

Shain Vernier

US Analyst

Shain Vernier has spent over 7 years in the market as a professional futures, options and forex trader. He holds a B.Sc. in Business Finance from the University of Montana. Shain's career includes stretches with several proprietary trading firms in addition to actively managing his own accounts. Before joining FX Leaders, he worked as a market analyst and financial writer.

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