USDCHF Analysis
| Performance after Wednesday | |||||
| Period | Pct | Chg | Momentum | ||
| Wednesday | 0.11% | 8.9 Pips |  |
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| Week to-date | -0.08% | -7.1 Pips |  |
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| September | -0.01% | -0.9 Pips | |
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What happened lately
Recent economic data from the U.S. has showcased a mix of changes across various indicators. The Federal Reserve has revised its interest rate projections across multiple timeframes. Notably, the U.S. interest rate projections dropped to 4.4% from a previous 5.1%, signaling a dovish stance. For the second year, the projections also declined to 2.9% compared to the prior 3.1%, while longer-term projections slightly increased to 2.9% from 2.8%. The rate for the third year remained stable at 2.9%. Additionally, the Fed’s decision on the Federal Funds Rate ended below expectations, falling to 5% from the previous 5.5%, further indicating a more accommodative monetary policy approach in the near term. The first-year interest rate projections also fell significantly to 3.4% from 4.1%. These adjustments suggest the Federal Reserve is pivoting to provide economic support amidst potential headwinds.
Alongside these interest rate changes, other economic indicators demonstrated signs of improvement. August saw an uptick in building permits, which rose to 1.475 million from a revised figure of 1.406 million in July, according to the Census Bureau. Similarly, housing starts in August increased to 1.356 million from 1.237 million in the prior month. Industrial production for the month increased by 0.8%, rebounding from a contraction of -0.6% in July. Conversely, retail sales data displayed a mixed outcome where the retail trade control group dropped to 0.3% from a revised 0.4%, and retail sales excluding automobiles also fell to 0.1% from 0.4%.
The recent U.S. economic data is likely to have significant implications for the USDCHF currency pair. The decline in interest rate projections and the Federal Funds Rate points to a more dovish monetary policy stance by the Federal Reserve, potentially weakening the U.S. dollar due to lower expected returns. On the other hand, the mixed data on industrial production, housing, and retail performance create a nuanced outlook. However, given the more substantial information coming from the interest rate changes, the overall net impact would likely lean towards a weaker USD. Consequently, the slight rise in USDCHF by 0.11% to 0.84699 seen recently might stall, leading to potential depreciation in the USDCHF pair if the dovish sentiment prevails.
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What can we expect from USDCHF today?
USDCHF on Wednesday rose 0.11% to 0.84699. Price is below 9-Day EMA while Stochastic is rising.
Updated daily direction for USDCHF looks mixed as the pair is likely to consolidate above 0.84134 (S1).
Looking ahead today, to see upside interest, we prefer to look at price breakout of last daily high of 0.84796 or trades above daily pivot 0.84465. Break above could target R1 at 0.8503. While to the downside, we are looking at 0.84134 (S1) and daily low of 0.83900 as support levels. USDCHF need to break on either side to indicate a short-term bias. A break above 0.84796 may suggest continuation after recent positive movement.
For the week to-date, take note that USDCHF is mixed as compared to the prior week.
Key levels to watch out:
| R3 | 0.85926 |
| R2 | 0.85361 |
| R1 | 0.8503 |
| Daily Pivot | 0.84465 |
| S1 | 0.84134 |
| S2 | 0.83569 |
| S3 | 0.83238 |
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