USDCHF Rebounds as Trump Comments Shift Market Sentiment

UPDATE: The USDCHF currency pair has just bounced from its cycle lows, sparking questions about whether this is merely a pullback or a potential reversal. The US dollar is showing slight strength following positive comments from Donald Trump regarding trade relations with China, as Treasury yields rebounded, recovering from losses experienced on Thursday.

Market sentiment has shifted rapidly, influenced by Trump’s recent threats of tariffs, which have created a climate of uncertainty. The ongoing US government shutdown is delaying crucial economic reports, intensifying the need for strong US data, particularly in the labor market, to sustain the dollar’s momentum. Traders are keenly awaiting the US CPI report, set for release today, which could serve as a pivotal risk event for the dollar.

The Swiss National Bank (SNB) has maintained its current interest rates, showing no change in their monetary policy. SNB President Schlegel indicated that the threshold for further rate cuts is exceptionally high, suggesting that short-term negative inflation figures will not prompt additional easing. Recent Swiss inflation figures have shown a slight rebound, but with a long road ahead to reach the 2% inflation target, the CHF remains heavily influenced by global risk sentiment.

On the daily chart, USDCHF recently dipped below a major upward trendline, hitting a low of 0.7872 before recovering slightly. If the price rolls over again, buyers are expected to enter around this level, targeting a rally towards 0.8073. Conversely, sellers will look for a breakdown below this support to increase their bearish positions.

The 4-hour chart indicates a prevailing downward trend, with the price trading just above the bearish momentum trendline. Sellers are likely to position themselves with defined risks above this trendline, aiming for lower prices. Meanwhile, buyers may seek to push the price higher toward 0.8073, especially if the bullish momentum can be sustained.

In the 1-hour chart, price action reveals resistance around 0.7935, suggesting sellers will continue to dominate below this level. Buyers, however, are eager to see a breakout above resistance to bolster their bullish bets.

As market participants brace for the US CPI report and flash PMIs today, the focus remains squarely on developments in US-China relations. Should any negative news emerge, it could overshadow the CPI data, leading to heightened market volatility.

Stay tuned for further updates on this dynamic situation, as traders assess the implications of today’s economic indicators.