USDCHF trend shows that broad USD recovery remains on track
Sight deposits at the Swiss National Bank are holding steady this month, suggesting the SNB is happy with the current level of the exchange rate – as well it should be after the rally in USDCHF and EURCHF in recent weeks. However, Swiss LIBOR is being held in a tight range around negative 0.75%, so as to not rock the boat.
Meanwhile, expectations for a June rate hike by the Fed have grown to 30% from only 4% earlier in the month. That may change a little this week when we see today’s manufacturing PMI and Wednesday’s services version, in an otherwise quiet data week.
FOMC chair Janet Yellen appears on Friday at a Harvard event, where she is to be honoured and will talk about her “ground breaking achievements”. This is an unlikely forum for any guidance on monetary policy. A better opportunity will come on June 6. See more on that here: Watch for Yellen's June 6 speech to confirm rate hike.
On its May 3 low of 0.9445, USDCHF completed a “double three” corrective structure (from an Elliott Wave perspective) and then last week saw the dollar complete its bullish descending wedge pattern (which has been forming all year; seer daily chart below).
Entry: Today, any dip to around 0.9875 is seen as providing another a buying opportunity.
Time horizon: Allow several days/weeks for both targets to be met.
USDCHF daily chart (click to expand)
USDCHF weekly chart (click to expand)
For more on forex, click here.