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USDCHF traders brace for action — key data on the horizon!

The USDCHF pair, commonly referred to as the "Swissie," represents the exchange rate between the US dollar and the Swiss franc. The US dollar is heavily influenced by US economic indicators, such as inflation, employment, and Federal Reserve policy decisions. Meanwhile, the Swiss franc is known as a safe-haven currency, often appreciating during periods of global uncertainty or economic instability. Swiss economic indicators, such as inflation and interest rate decisions by the Swiss National Bank, also impact the franc’s value.

Switzerland Consumer Price Index (CPI) MoM, Oct 3, 8:30 (GMT+2)

The Swiss Consumer Price Index (CPI) is forecast to be unchanged at 0.0% for the month, indicating a stable price level in the country. If the actual CPI data is better than expected and shows an increase in inflation, this would indicate rising consumer prices and a potential overheating of the Swiss economy. This could prompt the SNB to take a tougher stance, possibly holding rates longer without a cut, which would cause the Swiss Franc to rise and push the USDCHF lower.

Conversely, if the Consumer Price Index comes in worse than expected, indicating lower inflation or even deflation, this would indicate weakening economic conditions in Switzerland. This could force the SNB to maintain or even loosen monetary policy, likely weakening the Swiss franc and causing the USDCHF to rise.

US Nonfarm Payrolls, Oct 4, 14:30 (GMT+2)

The US non-farm payrolls report is expected to show an increase of 130,000 jobs, down from the previous reading of 142,000. If the actual number exceeds expectations, indicating stronger job growth, it will indicate the resilience of the US labor market. This could lower expectations of a rate cut by the Federal Reserve, as the need for monetary easing will seem less urgent, leading the USDCHF pair to rise.

However, if the non-farm payroll data is worse than expected and shows weaker job growth, it could raise concerns about the health of the US economy. This will likely increase speculation that the Federal Reserve may cut interest rates and cause the USDCHF pair to fall.

The last time NFP data was released on September 6, it came in well below expectations, leading to a lot of volatility in the market.

In the Daily timeframe, USDCHF formed a descending triangle in a long-term bearish trend. The price is squeezed between two levels, which makes two scenarios possible:

If the bears push the price below the 0.8420 support, the downside target will be 0.8230, corresponding to 161.8 Fibonacci;

However, if the price breaks the trend line and rises above 0.8500 and the nearest fractal, the upside would be 0.8700.

• Gold is trading sideways today, but close to recent highs
• Volatility drops as a key US data week starts
• Momentum indicators are less bullish at this juncture

Gold is trading sideways today, a tad below its recent all-time high of 2,685. With the dollar remaining on the back foot, the market is preparing for an action-packed week with Friday’s non-farm payrolls figure being the highlight of the US data calendar. As such, gold traders could be taking a breather after another strong weekly performance, with one eye on the developments in the Middle East.

In the meantime, the momentum indicators are slightly less bullish. The RSI remains above its midpoint, but it is clearly edging lower. Similarly, the Average Directional Movement Index (ADX) is hovering well above its 25 midpoint. However, it is showing little appetite for a move higher and therefore points to a slightly weaker bullish trend in gold. More importantly, the stochastic oscillator has completed 50 days inside its overbought territory (OB), but it has crossed below its moving average (MA). Should this move lower continue, it could be seen as a strong bearish signal.

If the bulls remain confident, they could try to regain the market reins and gradually overcome the all-time high at 2,685. If successful, they would enter uncharted waters again, with the next plausible targets being the 2,700 and 2,750 levels respectively, which could easily be broken if market forces remain very strong.

On the flip side, the bears are keen for a long-overdue correction. They could push gold towards the 261.8% Fibonacci extension of March 8, 2022 – September 28, 2022 downtrend at 2,601, but their main target is probably the busy 2,521-2,532 area. This is populated by the August 20, 2024 high and the 50-day simple moving average (SMA). Even lower, the bears could then test the support set by the July 17, 2024 high at 2,484.

To sum up, gold traders could be staying on the sidelines ahead of this week’s rich data calendar that could play a key role in the next leg in gold. 

Daily Pivots: (S1) 1.1124; (P) 1.1164; (R1) 1.1202; More....

Intraday bias in EUR/USD remains neutral and more consolidations could be seen below 1.1213. But further rally is expected as long as 1.1001 support holds. Above 1.1213 will resume the rise from 1.0665 to 1.1274 high. Firm break there will resume larger up trend. Next near term target will be 100% projection of 1.0776 to 1.1200 from 1.1001 at 1.1425.

In the bigger picture, corrective pattern from 1.1274 should have completed at 1.0665 already. Decisive break of 1.1274 (2023 high) will confirm resumption of whole up trend from 0.9534 (2022 low). Next target will be 61.8% projection of 0.9534 to 1.1274 from 1.0665 at 1.1740. This will now be the favored case as long as 1.1001 support holds.

Daily Pivots: (S1) 140.66; (P) 143.58; (R1) 145.08; More...

Intraday bias in USD/JPY remains on the downside as fall from 146.48 is in progress for retesting 139.578. Strong support could be seen again from 139.26 fibonacci level to bring rebound. However, firm break of 139.26 will carry larger bearish implications.

In the bigger picture, fall from 161.94 medium term top is seen as correcting whole up trend from 102.58 (2021 low). Strong support could be seen from 38.2% retracement of 102.58 to 161.94 at 139.26 to contain downside, at least on first attempt. But in any case, risk will stay on the downside as long as 149.35 resistance holds. Sustained break of 139.26 would open up deeper medium term decline to 61.8% retracement at 125.25.

Daily Pivots: (S1) 1.3346; (P) 1.3387; (R1) 1.3414; More...

Intraday bias in GBP/USD remains neutral and more consolidations could be seen below 1.3433 temporary top. Further rally is expected as long as 1.3265 resistance turned support holds. Above 1.3433 will resume larger rise to 100% projection of 1.2664 to 1.3265 from 1.3000 at 1.3601 next. Nevertheless, considering bearish divergence condition in 4H MACD, firm break of 1.3265 will indicate short term topping and turn bias back to the downside for 1.3000 support instead.

In the bigger picture, up trend from 1.0351 (2022 low) is in progress. Next target is 61.8% projection of 1.0351 to 1.3141 from 1.2298 at 1.4022. For now, outlook will stay bullish as long as 1.3000 support holds, even in case of deep pullback.

Daily Pivots: (S1) 0.8374; (P) 0.8433; (R1) 0.8465; More…

Intraday bias in USD/CHF remains neutral as range trading continues above 0.8374. Further decline is in favor with 0.8548 resistance intact. On the downside, break of 0.8374 will resume the fall from 0.9223 to retest 0.8332 low. Decisive break there will indicate larger down trend resumption. Nevertheless, firm break of 0.8548 will turn bias back to the upside for stronger rebound to 0.8747 resistance instead.

In the bigger picture, price actions from 0.8332 (2023 low) are currently seen as a medium term corrective pattern, with fall from 0.9223 as the second leg. Strong support could be seen from 0.8332 to bring rebound. Yet, overall outlook will continue to stay bearish as long as 0.9243 resistance holds. Firm break of 0.8332, however, will resume larger down trend from 1.0146 (2022 high).

Daily Pivots: (S1) 0.6868; (P) 0.6902; (R1) 0.6937; More...

Intraday bias in AUD/USD remains on the upside for the moment. Current rally from 0.6340 should target 100% projection of 0.6348 to 0.6823 from 0.6621 at 0.7096. On the downside, below 0.6867 minor support will turn intraday bias neutral first.

In the bigger picture, overall, price actions from 0.6169 (2022 low) are seen as a medium term corrective pattern, with rise from 0.6269 as the third leg. Firm break of 0.6870 resistance will target 100% projection of 0.6269 to 0.6870 from 0.6340 at 0.6941, and then 138.2% projection at 0.7179. This will now remain the favored case as long as 0.6621 support holds.

Daily Pivots: (S1) 1.3477; (P) 1.3502; (R1) 1.3540; More...

Intraday bias in USD/CAD remains neutral for the moment. While recovery from 1.3418 might extend higher, outlook will stay bearish as long as 1.3646 resistance holds. On the downside, break of 1.3418 will resume the fall from 1.3946 to 61.8% projection of 1.3946 to 1.3439 from 1.3646 at 1.3333.

In the bigger picture, corrective pattern from 1.3976 (2022 high) is extending with another falling leg. While deeper decline could be seen, strong support should emerge above 1.2947 resistance turned support to bring rebound. Rise from 1.2005 (2021 low) is still in favor to resume at a later stage.

Swiss KOF Economic Barometer edged higher in September, rising from 105.0 to 105.5, surpassing market expectations of 102.0. This modest increase reflects a slow but steady recovery in the Swiss economy, with KOF noting that "the Swiss economy is slowly working its way out of the trough."

According to KOF, nearly all sectors show signs of a more favorable outlook. Manufacturing industry, in particular, has seen the most significant improvement, while financial and insurance services, construction, and other service sectors also show positive momentum.

Hospitality industry continues to maintain above-average prospects, with little change compared to prior months. On the demand side, consumer demand indicators remain stable and point to further growth. However, KOF highlighted that indicators for future foreign demand have weakened, suggesting potential challenges for Swiss exports going forward.

Full Swiss KOF release here.

Daily Pivots: (S1) 0.9348; (P) 0.9413; (R1) 0.9449; More....

Intraday bias in EUR/CHF stays neutral for the moment. On the upside, above 0.9506 will resume the rebound from 0.9305 to 0.9579 resistance. However, break of 0.9305 will resume the fall for 0.9579 to retest 0.9209 low.

In the bigger picture, medium term corrective pattern from 0.9407 (2022 low) might have completed with three waves to 0.9928. Decisive break of 0.9252 (2023 low) will confirm long term down trend resumption. Next target will be 61.8% projection of 1.1149 to 0.9407 from 0.9928 at 0.8851. For now, outlook will stay bearish as long as 0.9928 resistance holds, even in case of strong rebound.