USDCHF is probably the purest US dollar play on offer
The SNB is holding three month Swiss Libor tightly around -0.75%, right in the middle of its trading band, probably waiting for Thursday’s European Central Bank meeting before considering any fine tuning.
Meanwhile US money markets have backed off a June or July rate hike a touch, the odds being about 25% and 60% respectively. Perhaps that’s because the Federal Reserve’s inflation benchmark, the price index of Personal Consumption Expenditures, only matched expectations yesterday.
Today’s ISM Manufacturing survey will be closely watched, given weakness in other manufacturing indicators lately. But Friday’s employment report will be the big test for the dollar.
From an Elliott Wave perspective, on its May 3 low of 0.9445, USDCHF completed a complex “Double Three” corrective structure. Since then, from a classical charting stand point, USDCHF has also completed a bullish Descending Wedge chart pattern (refer daily chart below).
In the short term, whilst today holding support at 0.9915/0.9885, yields the resumption of uptrend above 0.9955 resistance toward the 1.0080 level (see daily cart below). A loss of 0.9885 support however, would probably trigger a corrective selloff back toward the late 0.9700’s.
Entry: Today, there is a short term opportunity to Buy USDCHF around the 0.9920 level (directly above .9955 resistance however, cancels, as not prepared to chase the market higher).
— Edited by Robert Ryan
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Max McKegg is managing director of Technical Research Limited. If you would like an email notice each time Max posts an article or trade, then click here to follow him.
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