USD Opens Weekly Trade On The Bull

The forex is off and running this week, with the big winner thus far being the USD. Fueled by a decent group of Monday morning metrics, the Greenback is on the march vs the majors. Today’s key movers have been the USD/CHF (0.75%), EUR/USD (-0.53%), and USD/CAD (+0.46%). For the USD/CHF and EUR/USD, current weekly trends are under fire.

During the pre-Wall Street open, there were a collection of reports released to the public. Here are the headliners:

Event                                                                  Actual                     Projected             Previous

Markit Manufacturing PMI (Jan.)                       59.2                             59.1                      57.1

ISM Manufacturing Employment (Jan.)             52.6                            NA                        51.7

ISM Manufacturing New Orders (Jan.)              61.1                             NA                        67.9

Construction Spending (Jan.)                            1.0%                              0.9%                    0.9%

All in all, this is a strong group of figures facing the manufacturing sector. Activity was up to start 2021 as many expect a robust long-term COVID-19 recovery to begin taking shape in Q1. However, this morning’s numbers weren’t all roses. The ISM Manufacturing New Orders Index (Jan.) fell dramatically from December levels. Is this a sign that big business is preparing for a contraction in activity? Not necessarily. But, this will be a trend to watch as this week’s jobs and ISM Non-Manufacturing reports are put out later in the week.

For the USD, the sentiment is exceedingly positive. Let’s take a look at how the USD/CHF is trading to kick off February.

USD/CHF Challenges Weekly Downtrend

In a Live Market Update from last Thursday, I outlined the bearish trend facing the Swissie. Now, it may be time to rethink the downside bias. Rates have broken above a key 38% retracement level and Weekly SMA.

Here are the key levels to watch in the USD/CHF for this week:

• Resistance(1): Bollinger MP, 0.9022
• Support(1): Weekly SMA, 0.8936
• Suport(2): 38% Current Wave, 0.8929

Bottom Line: If the Swissie extends its early-week rally, a selling opportunity may come to pass. Until Friday’s close, I’ll have sell orders in the queue from 0.9018. With an initial stop loss at 0.9058, this trade produces 40 pips profit on a standard 1:1 risk vs reward ratio.