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The weak Dollar theme continues to reign supreme, so we’re checking out this simple technical setup on USD/CHF for a short-term play.

Before moving on, ICYMI, today’s Daily London Session Watchlist looked at an opportunity forming on EUR/JPY ahead of Eurozone PMI reports, so be sure to check that out to see if there is still a potential play!

Intermarket Snapshot

Equity Markets Bond Yields Commodities & Crypto
DAX: 12987.09 +0.32%
FTSE: 5870.23 -1.57%
S&P 500: 3512.76 +0.36%
DJIA: 28507.29 +0.26%
US 10-YR: 0.718% +0.025
Bund 10-YR: -0.403% -0.007
UK 10-YR: 0.325% +0.012
JPN 10-YR: 0.041% -0.008
Oil: 43.32 +1.67%
Gold: 1978.40 -0.01%
Bitcoin: 11885.71 +1.72%
Ethereum: 468.52 +7.35%

Fresh Market Headlines & Economic Data:

Stocks rise slightly as Wall Street tries to build on its best August since 1980s, Apple leads tech

IHS Markit U.S. Manufacturing PMI: Fastest manufacturing expansion since January 2019

ISM Manufacturing PMI: 56.0 in August vs. 54.2 in July

U.S. construction spending almost flat in July: Commerce Department

Oil prices lifted by weaker dollar and soaring equities

Canadian Manufacturing PMI signals fastest growth since August 2018

Modest growth of eurozone manufacturing sector sustained

Euro area unemployment at 7.9%; EU at 7.2%

Euro area annual inflation down to -0.2%

ECB’s De Guindos sees bank consolidation in euro zone starting soon

German Joblessness Falls Again Amid Revival of Economic Activity

UK Manufacturing production rises at fastest pace since May 2014 as re-opening of economy continues

Upcoming Potential Catalysts on the Economic Calendar

ECB Lane speech at 4:00 pm GMT
Fed Brainard speech at 5:00 pm GMT
API Crude oil stock change at 8:30 pm GMT
NZD Overseas Trade Index at 10:45 pm GMT
U.S. Total Vehicle sales at 12:00 am GMT (Sept. 2)
Australia GDP at 1:30 am GMT (Sept. 2)
BOJ Wakatabe speech at 1:30 am GMT (Sept. 2)

What to Watch: USD/CHF

USD/CHF 1-Hour Forex Chart
USD/CHF 1-Hour Forex Chart

On the one-hour chart above of USD/CHF, we can see a clear deseeding channel over the past couple of weeks since topping out around 0.9150. But the bulls managed to take back control around the 0.9000 major psychological handle this week, and the pair shot higher on the session to retest the falling ‘highs’ pattern, as well as a broken minor support area around 0.9075. Will the bears take back control here?

Well, with the broad themes having been a weak U.S. dollar on improving risk sentiment and a very accommodative Federal Reserve, odds are that a lot of traders will continue to look for opportunities to sell the dollar at better prices, as they have been in late August.

And with stochastic signaling overbought conditions and resistance starting to form at the trend line, the odds increase for a reversal even further.

For the bears, this could be another opportunity to short given no major catalysts ahead to likely change short-term sentiment, but it’s probably a good idea to wait for further bearish reversal patterns, or to scale into a short position from current levels up to the previous swing high around 0.9120.

For the bulls, the odds of an upside break of the falling ‘highs’ pattern are pretty low right now, but if we see something like hawkish commentary on inflation from Fed officials, then traders could lighten up on USD shorts.

In that scenario, look out for a break above the falling trendline and with a daily ATR of around 70 pips, a move to the previous swing high around 0.9150 is a short-term possibility if the catalyst is strong enough.