USD/CHF Surges Amid Positive Trump Comments, Key CPI Data Ahead

UPDATE: The USD/CHF pair has bounced back from cycle lows as the US dollar shows signs of recovery following positive comments from Donald Trump regarding China trade relations. As of Friday, July 14, 2023, the dollar’s performance reflects mixed sentiment, driven by swift changes in market risk appetite.

The greenback’s strength comes as US Treasury yields rebound, offsetting losses from earlier in the week. However, the ongoing US government shutdown continues to impact crucial economic data releases, creating uncertainty for traders. Analysts stress that the upcoming BLS Consumer Price Index (CPI) report, set to release today despite the shutdown, could significantly influence market direction.

Why This Matters NOW: Today’s CPI report is pivotal for the USD. If inflation numbers come in strong, they may bolster the dollar’s recovery. However, any negative surprises could heighten recession fears, overshadowing the importance of inflation data. Market participants are closely monitoring US-China relations, as any adverse developments could further destabilize the dollar’s trajectory.

On the Swiss side, the Swiss National Bank (SNB) has maintained interest rates, leaving the currency primarily driven by external risk sentiment. SNB President Schlegel indicated that the bar for further rate cuts remains high, emphasizing the need for significant positive data to alter their current stance.

On the daily chart, USD/CHF recently dipped below the major upward trendline, reaching a low of 0.7872 before rebounding on Trump’s comments. Should the price decline again, analysts predict buyers will step in around the 0.7872 level, with a target rally towards 0.8073. Conversely, sellers aim for a breakdown below this level to intensify bearish positions.

The 4-hour chart highlights a downward trendline that defines the current bearish momentum. The price is trading slightly above this line, showing resistance from sellers eager to capitalize on potential new lows.

As traders assess the situation, all eyes are on today’s developments. The US flash PMIs will also be released, providing further clarity on economic performance amid ongoing geopolitical tensions.

In summary, with the USD/CHF pair at a critical juncture, the outcome of the CPI report and evolving US-China dynamics will play crucial roles in determining the next market moves. Stay tuned for updates as this situation unfolds.