The Swiss Franc rallied nearly 112 pips to the high of 1.0098 against the USD during initial Asian trading on Monday. However, the USD/CHF failed to hold those gains for longer and drops to mark the day’s low of 0.9986 afterwards. Not only USD/CHF, but all other pairs comprising CHF are also affected with a spike during initial sessions.
Such moves are less backed by any big fundamental or technical catalysts but are generally a result of thin liquidity in the markets when only few traders are active. It should also be noted that these moves generally reverses the initial gains or losses in a short period of time.
If we look at the fundamentals, the on-going US-China trade talks and the US headline inflation numbers are likely to gain major market attention.
Sentiments at trade talk haven’t been positive off late as latest comments from the White House Adviser Lawrance Kudlow that both the sides are still far apart from any solution and then the US President Donald Trump’s refrain to meet his Chinese counterpart before the March 01 deadline ends signal red lights to the successful deal. During this week, the US trade representative Robert Lighthizer and Treasury Secretary Steven Mnuchin.are to meet high rank Chinese officials to discuss the deal.
At the economic front, Wednesday’s US Consumer Price Index (CPI), followed by Thursday’s Retail Sales, are likely headline stats that could direct near-term USD moves. The January month CPI is likely to reverse earlier losses of -0.1% with a +0.1% growth on a monthly basis whereas Retail Sales numbers can soften to 0.1% from 0.2% during the December month.
While thin liquidity is likely being a reason for an early-day spike of the Swiss Franc (CHF), investors may wait for aforementioned fundamentals before taking any big positions of the USD/CHF pair.
USD/CHF Technical Analysis
A month-old upward sloping trend-line connecting January lows, at 0.9980, seem nearby support for the USD/CHF pair, breaking which 0.9905 may regain market attention.
Alternatively, 1.0030 and the 1.0045 can act as immediate resistances for the pair prior to fuelling it to the 1.0085 and the 1.0120 upside barriers.
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