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We’re checking USD/CHF today with a slew of Fed speak ahead. Will the Dollar rally continue or will resistance finally hold the bulls back short-term?

Before moving on, ICYMI, today’s Daily London Session Watchlist looked at an opportunity forming on NZD/USD after a bullish NZ jobs update, so be sure to check that out to see if there is still a potential play!

Equity Markets Bond Yields Commodities & Crypto
DAX: 13905.13 +0.51%
FTSE: 6499.21 -0.27%
S&P 500: 3822.24 -0.11%
NASDAQ: 13600.25 -0.09%
US 10-YR: 1.119% +0.012
Bund 10-YR: -0.472% +0.014
UK 10-YR: 0.364% +0.014
JPN 10-YR: 0.058% +0.009
Oil: 55.98 +2.23%
Gold: 1,833.60 +0.01%
Bitcoin: 36,809.96 +3.65%
Ethereum: 1,586.81 +4.64%

Fresh Market Headlines & Economic Data:

S&P 500 is flat after back-to-back rally

Cryptocurrency Ethereum hits record high ahead of CME futures launch

Oil prices near 1-year highs after stocks drawdown, supply deficit forecast

U.S. private payrolls rebounded in January – ADP

ISM Services PMI at 58.7 for January, above December’s read of 57.7

Sharp upturn in business activity amid stronger client demand – IHS Markit

Flash estimate – January 2021 Euro area annual inflation up to 0.9%

December 2020 Industrial producer prices up by 0.8% m/m in the euro area; Up by 0.9% m/m in the EU

Service sector leads further contraction of eurozone economy – IHS Markit

Sharp fall in business activity in January, but vaccine rollout helps lift optimism to its highest since May 2014

U.K.’s Gove calls on EU to extend N.I. grace period until 2023

Upcoming Potential Catalysts on the Economic Calendar

Fed Bullard speech at 6:00 pm GMT
Fed Harker speech at 7:00 pm GMT
Fed Mester and Evans speech at 10:00 pm GMT
Fed Kaplan speech at 11:05 pm GMT
Australia Trade Balance at 12:30 am GMT (Feb. 4)

What to Watch: USD/CHF

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

The Greenback has been in rally mode lately and with quite a few Fed speeches ahead, the volatility on the Greenback could stay bid going into the next session.

Now, will the bullish bias continue? We don’t know, but with U.S. economic data arguably rebounding (IHS Markit U.S. manufacturing PMI hits record high at 59.2U.S. private payrolls rebounded in January – ADP, CBO sees rapid growth recovery), the odds are in favor of Fed speak leaning cautiously optimistic (i.e., likely to cite improving data but continued need for stimulus).

That makes this rally in USD/CHF one to watch as we see a couple of long setups if Fed officials spark more bullish Dollar sentiment. The pair is currently testing a major psychological level (0.9000), and seems to be having trouble today breaking it.

If we do see a break higher, though,  off of any catalysts, it’s likely to draw further buying in the short-term, but probably not too far as the next potential resistance area lies around the previous broken support area around the 0.9025.

A better situation for USD bulls is for the pair to pullback from current levels and wait for bullish reversal patterns, possibly around the minor psychological level of 0.8950, where we saw buying support yesterday.

Of course, the rally in USD could fade quickly if we get hints of dovishness from the Fed speakers later (possibly on a slower than expected vaccine rollout in the U.S.), and if that sparks selling, a move to the previous consolidation area (0.8920) is not out of the realm of possibilities.