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The U.S. CPI report is comin’ right up!

Can this complete the break-and-retest setup on USD/CHF?

Before moving on, ICYMI, today’s Asia-London session watchlist looked at AUD/JPY’s downtrend setup ahead of  inflation data from China. Be sure to check out if it’s still a valid play!

And now for the headlines that rocked the markets in the last trading sessions:

Fresh Market Headlines & Economic Data:

Chinese headline CPI jumped from 0.7% to 1.5% vs. 1.4% consensus

Chinese producer prices soared 13.5% vs. 12.2% forecast

New Zealand preliminary ANZ business confidence index down from -13.4 to -18.1

Japanese preliminary machine tool orders rose from 71.9% to 81.5%

Asian markets stall rallies as energy crunch stokes inflation woes

Upcoming Potential Catalysts on the Forex Economic Calendar:

U.S. headline and core CPI at 1:30 pm GMT
U.S. initial jobless claims at 1:30 pm GMT
U.S. EIA crude oil inventories at 3:30 pm GMT

If you’re not familiar with the forex market’s main trading sessions, check out our Forex Market Hours tool.

What to Watch: USD/CHF

USD/CHF 1-hour Forex Chart
USD/CHF 1-hour Forex Chart

This pair recently tumbled below its rising trend line support, indicating that a reversal from the short-term climb could follow.

Price pulled up after dipping to the .9100 area, though, and a retest of the broken support is taking place.

USD/CHF already seems to be stalling at the 38.2% Fib, which lines up with the dynamic resistance at the moving averages, but Stochastic still has a bit of room to climb.

Will sellers return soon?

Applying the Fibonacci retracement tool shows that the 50% level lines up with the former trend line and area of interest around .9130.

A larger correction could reach the 61.8% Fib closer to the .9150 minor psychological resistance. If any of these keep gains in check, USD/CHF could slide back to the lows or even make new ones!

This could all boil down to the outcome of the U.S. CPI release, as stronger price pressures are eyed. The headline reading is slated to pick up from 0.4% to 0.6% while the core version might rise from 0.2% to 0.4%, fueling Fed tightening expectations.

Disappointing data, on the other hand, might mean plenty of downside for the dollar since it could push back rate hike bets to much later next year.