Bottom line:  USDCHF structure remain bearish against 0.9900, at least in the short term. A drop towards 0.9450 levels could be seen in the next few trading sessions.

Fundamental Outlook:

Optimism over anticipated agreement by OPEC members, fail to stop a near 20% drop in Oil.

Oil prices had risen by over 7% yesterday just before the scheduled meeting of OPEC members. As expected, an agreement was reached by Russia and Saudi Arabia to end the price war. It was agreed to cut production by over 23% over the next 2 months. Surprisingly, Oil prices dropped by over 20% after the news, before recovering back.

Global Markets continue north alongside Dow Jones and SPX500, after Fed injects $2.3 trillion.

Markets remained broadly unaffected after the dismal Job Data (6.6 million filed for benefits). This was due to Fed announcing a $2.3 trillion stimulus, to support the economy. Right after the announcement, the Dow Jones and SPX500 rallied towards 24000 and 2820 respectively before pulling back. It remains to be seen how long the party continues for Global Equity Markets.

The US Dollar slides over Fed stimulus and declining curve of COVID-19 cases in New York and Italy.

The US Dollar Index dropped from over 100.10/20 in early trade to 99.30/40 levels during close yesterday. The index declined mainly due to further stimulus announced by the Fed to help stabilize markets and overall economy. As Italy and New York reported declining number in new COVID-19 cases, it added further to the decline in index.

Today’s Events:

1. 0830 AM EST USD Consumer Price Index, to print lower around 1.6% versus 2.3%
2. 0830 AM EST USD Consumer Price Index Ex Food and Energy 2.3% versus 2.4%

Technical Analysis:

USDCHF continues to remain in control of bears since 0.9900 levels. After dropping lower towards 0.9500 levels, the single currency pair had managed to pull back and found resistance at 0.9800 levels. Bears are expected to remain in control from here, and push prices lower at least towards 0.9450.

The fibonacci 0.618 retracement of the previous rally is seen around 0.9450 and a bullish bounce there, would be encouraging for bulls. However, if the drop continues below 0.9335, we can expect a test of swing lows around 0.9184 levels.

Overall, the bearish structure remains intact for USDCHF until prices stay below 0.9900 levels as most traders might be willing to initiate short positions going forward.

Prepared by

Harsh Japee, Technical Analyst.

USDCHF Chart

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