CFDs are complex instruments and come with a high risk of losing money rapidly due to leverage. 69% of retail investor accounts lose money when trading CFDs with this provider. You should consider whether you understand how CFDs work and whether you can afford to take the high risk of losing your money.
Open account
☰
CFDs are complex instruments and come with a high risk of losing money rapidly due to leverage. 69% of retail investor accounts lose money when trading CFDs with this provider. You should consider whether you understand how CFDs work and whether you can afford to take the high risk of losing your money.
Open account
✖

USDCHF hits resistance ahead of key US macro events

Article By: ,  Financial Analyst
July 10, 2019 8:56 AM

Powell testimony, FOMC minutes and US CPI all coming up over the next 24 hours…

Today’s North American session should be very lively, with the Bank of Canada rate decision, Federal Reserve Chairman Jerome Powell’s testimony and FOMC minutes all to look forward to, ahead of US CPI tomorrow. This obviously makes the USD/CAD the pair to watch, but in truth any US or Canadian dollar pairs could move, as well as stocks and gold. This is why we want to focus on the USD/CHF today for the franc is likely to respond to the volatility in the stock markets. The Swissy has also reached a critical technical juncture, so it is next move could be very important for technically-minded market participants.

Investors will be looking to Powell for guidance. Could he suggest that a rate cut in July will be a one off? There are also some suggestions that a July cut may not be necessary after all, given, for example, the health of the labour market. However, Powell knows that if he pushes rate cuts expectations out until September then that could trigger a furious response from both Donald Trump and the dollar, while stock could fall further. Thus, he will probably err on the side of caution and offer little in the way of strong hints about policy direction in the upcoming meetings, especially as consumer inflation figures won’t be released until tomorrow. Still, the markets, as usual, will over-analyse anything he says. If Powell is more vocal about the risks facing the economy and cautious on his outlook, then the markets may interpret that as a sign that the Fed will cut interest rates, while if he is sounding more optimistic, then that could send the dollar higher as investors push back their rate cut expectations.

The USD/CHF has hit a major resistance zone between 0.9930 and 1.0000. This is where we have both the 50- and 200-day moving averages converge with a bearish trend line and an old support area. So we are not surprised at all to see some hesitation here, especially given the size of the recent rebound from this year’s low of 0.9695 hit on June 25. The key level of support we are watching now is at around 0.9870, a break below which could pave the way for a move towards the next key level at 0.9775. These levels were formerly resistance. Meanwhile a sustainable break above parity will end the bearish bias.

Source: Trading View and City Index.

StoneX Financial Ltd (trading as “City Index”) is an execution-only service provider. This material, whether or not it states any opinions, is for general information purposes only and it does not take into account your personal circumstances or objectives. This material has been prepared using the thoughts and opinions of the author and these may change. However, City Index does not plan to provide further updates to any material once published and it is not under any obligation to keep this material up to date. This material is short term in nature and may only relate to facts and circumstances existing at a specific time or day. Nothing in this material is (or should be considered to be) financial, investment, legal, tax or other advice and no reliance should be placed on it.

No opinion given in this material constitutes a recommendation by City Index or the author that any particular investment, security, transaction or investment strategy is suitable for any specific person. The material has not been prepared in accordance with legal requirements designed to promote the independence of investment research. Although City Index is not specifically prevented from dealing before providing this material, City Index does not seek to take advantage of the material prior to its dissemination. This material is not intended for distribution to, or use by, any person in any country or jurisdiction where such distribution or use would be contrary to local law or regulation.

For further details see our full non-independent research disclaimer and quarterly summary.

CFDs are complex instruments and come with a high risk of losing money rapidly due to leverage. 69% of retail investor accounts lose money when trading CFDs with this provider. You should consider whether you understand how CFDs work and whether you can afford to take the high risk of losing your money. CFD and Forex Trading are leveraged products and your capital is at risk. They may not be suitable for everyone. Please ensure you fully understand the risks involved by reading our full risk warning.

City Index is a trading name of StoneX Financial Ltd. Head and Registered Office: 1st Floor, Moor House, 120 London Wall, London, EC2Y 5ET. StoneX Financial Ltd is a company registered in England and Wales, number: 05616586. Authorised and regulated by the Financial Conduct Authority. FCA Register Number: 446717.

City Index is a trademark of StoneX Financial Ltd.

The information on this website is not targeted at the general public of any particular country. It is not intended for distribution to residents in any country where such distribution or use would contravene any local law or regulatory requirement.

© City Index 2024