New Wave Higher for USD/CHF? – Oct 7, 2014

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New Wave Higher for USDCHF?

New Wave Higher for USDCHF?

USDCHF has been trending higher and finding support at the 100 simple moving average on its 1-hour time frame. Price could continue its uptrend as it is currently showing a return in buying momentum.

Stochastic is moving out of the oversold zone, reflecting that buyers are ready to push the pair back up. MACD is reflecting the same behavior, with the indicator in the oversold area. In this case, price could climb back up to its previous highs near the .9700 major psychological level.

USDCHF Trend Forecast

However, a downside break from the 100 SMA might indicate that buying pressure isn’t strong enough yet. This could lead to a deeper correction to the 200 SMA, which is a longer-term support area. A bounce from this level could draw more buyers in, especially if the US economy continues to print strong data.

The event risks for this USDCHF trade today include Swiss retail sales, CPI, and foreign currency reserves data releases. Improvements are expected and these might renew demand for the Swiss franc, as the retail sales could print a 0.8% rebound while the CPI could show a 0.2% uptick. However, if the foreign currency reserves report indicates that the SNB could still afford to intervene in the currency market, the franc could still remain weak.

Bear in mind that the SNB is aiming to keep the franc from appreciating as this would dampen Switzerland’s feeble economic recovery. SNB head Thomas Jordan and his group of policymakers have been urged to ease further in order to ward of deflation in Switzerland and the prospect of negative rates has also popped up.

Meanwhile, the US recently printed a strong NFP reading and fueled speculations of a Fed rate hike early next year. FOMC officials are set to give speeches today and the minutes of their latest policy meeting are due tomorrow.

To contact the reporter of the story: Samuel Rae at samuel@forexminute.com

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Samuel Rae is an active retail trader across a variety of assets, including currencies, stocks and commodities and the author of Diary of a Currency Trader (Harriman House). His personal strategy focuses primarily on classical technical charting patterns with a fundamentally supportive bias, combined with a strict, risk management-driven approach to entries and exits. He is an Economics graduate from Manchester University, UK.