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The roller-coaster price action in the USDCHF continues, but for now the buyers remain in control.
The pair remains above both its 100-hour moving average at 0.80956 and its 200-hour moving average at 0.80902, and today extended into the next key swing area between 0.81079 and 0.81195. The session high reached 0.8120, just above the upper end of that area, before rotating modestly lower. The current price near 0.8112 remains within the swing area.
Holding above the 0.81079–0.81195 area – and ultimately extending above today’s 0.8120 high – would keep the buyers firmly in control and open the door for a move toward the 0.8153 area, which represents the upper end of the broader range that has contained most of the price action since mid-June. Above that, traders would look toward the late-July highs near 0.82063.
On the downside, the 100-hour MA at 0.80956 and 200-hour MA at 0.80902 remain the key short-term barometers for buyers and sellers. It would take a move back below both moving averages – and staying below – to shift the technical bias more firmly back to the downside.
That said, traders should keep the broader price action in perspective. Since mid-June, USDCHF has spent most of its time trading between approximately 0.8029 and 0.8153. There have been temporary extensions above and below that range, but neither buyers nor sellers have been able to sustain a lasting breakout. The price has also crossed above and below the 100- and 200-hour moving averages with regularity, highlighting the choppy nature of the market.
Those broader extremes remain the key targets. A sustained break above 0.8153 would strengthen the bullish case and put the late-July highs near 0.82063 in focus. Conversely, a reversal back below the hourly moving averages would weaken the bullish bias and turn attention back toward the lower end of the broader range near 0.8029.
For now, however, the buyers have the edge. The next step is getting and staying above today’s 0.8120 high. Tomorrow, the bullishness will be tested
Tomorrow, the dollar’s bullish bias will face an important test with the release of the U.S. CPI data at 8:30 AM ET.
Headline CPI is expected to rise 0.1% month-over-month, while the core measure is forecast to increase 0.2%. On a year-over-year basis, headline inflation is expected to ease slightly to 3.4% from 3.5%, while core CPI is forecast to tick down to 2.5% from 2.6%.
Needless to say, a hotter-than-expected report would likely provide another catalyst for dollar buying. With inflation still running above the Fed’s target, even a modest upside surprise could increase expectations that the Fed may tighten policy again at its September meeting. Conversely, softer inflation readings would likely take some of the pressure off the Fed and could lead to a reversal of some of the dollar’s recent gains.
Heading into the report, the market is pricing the chances of a September Fed rate hike at around 50%, leaving plenty of room for those expectations – and the dollar – to move depending on tomorrow’s inflation numbers.
This article was written by Greg Michalowski at investinglive.com.
