USDCHF has formed a head and shoulders pattern on its 1-hour forex chart, signaling that the recent climb could soon turn. The pair is starting its descent now, as price already broke below the neckline of the formation at .9300.
The chart pattern is approximately 250 pips in height, which means that the resulting breakdown might last by the same amount. This could take USDCHF down to the .9050 to .9100 levels.
The short-term 100 SMA has just crossed below the 200 SMA on the 1-hour chart, confirming the potential selloff. However, stochastic is moving up from the oversold area, indicating that a rally might take place. RSI is also giving the same signal, as the indicator is suggesting that sellers are already exhausted and that buyers might take over.
USDCHF Forex Fundamentals
In terms of fundamentals, the US dollar could enjoy stronger demand compared to the franc. After all, the US economy just printed a stronger than expected NFP report last week and this was enough to assure traders that the Fed can be able to hike interest rates by September.
Event risks for this USDCHF setup include the US retail sales release towards the end of the week. Both headline and core versions of the report could indicate a strong pickup in consumer spending, which could fuel rate hike speculations once more and push the dollar higher against its rivals.
As for Switzerland, the unemployment rate and the CPI are up for release today. The jobless rate is likely to stay unchanged at 3.3% but any increases might be negative for the franc. Meanwhile, the CPI could show a 0.1% uptick after printing a 0.2% decline in the previous month.
Euro zone updates could also have a significant role in this pair’s direction, as the franc typically takes its cues from the euro. Any positive developments on the Greek debt talks might lend support to the franc as well.
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