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Short term
Trade view / 16 June 2016 at 0:52 GMT

USDCHF consolidation to give way to downtrend

Managing Director / Technical Research Limited
New Zealand
Instrument: USDCHF
Price target:
Market price:
Background

The US Federal Reserve lowered its interest rate projections yesterday but still not enough to match the market. See here: Fed lowers rate projections but markets still don't buy itThis is likely to maintain downward pressure on the US dollar, especially if today’s CPI update doesn’t match expectations. 

But for USDCHF, attention will centre on the Swiss National Bank and its quarterly monetary policy review statement due out in a few hours. Switzerland’s exchange rate has been rising on the back of safe-haven flows ahead of the Brexit vote and markets are waiting to see what SNB President Thomas Jordan will have to say about it. 

No doubt the SNB has been “active” in the FX markets around the edges, but to take pressure off CHF he would have to drop the Bank’s policy rate (–0.75% currently) further down into the –0.25% to –1.25% target range.
  
Management and risk description

From an Elliott Wave perspective, USDCHF is interpreted to be undergoing a Triple Three corrective structure from last November’s 1.0330 high (refer daily chart below).
 
In the short term, corrective consolidation between 0.9580 – 0.9680 probably soon gives way to the resumption of a downtrend toward targets at 0.9500 and then 0.9445.
 
Parameters

Entry: today, USDCHF is seen as a sell from 0.9600 – 0.9630.

Stop: 0.9663, initially.

Target: 0.9463.

Time horizon: allow several days for both targets to be met.

USDCHF daily chart (click to expand)
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 Source: ThomsonReuters  

USDCHF weekly chart (click to expand)
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 Source: ThomsonReuters  

— Edited by Gayle Bryant

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