- USD/CHF is consolidating near 0.9250 amid a quiet start to a week of US CPI data releases.
- An upside surprise could make more case for an aggressive Fed tightening and build on last Friday’s post-employment data rally.
- Bulls may point to a retrace/test of last week’s highs in the mid 0.9350s.
It’s been a moderate session so far for the USD/CHF, with the pair pulling back from Asian session highs in the 0.9260 area to drop as low as 0.9220, before returning near 0.9250. The tone in currency markets on Monday has been, for the most part, dovish, with USD/CHF confirming the lack of volatility seen in most other major G10 currencies on the session.
Fed policymakers Michelle Bowman and Loretta Mester will speak on Wednesday ahead of the release of the January consumer price inflation report on Thursday. Traders will be interested to know if Bowman or Mester reject the recent market price reversal to imply a one in three chance of a 50 bps rate hike in March after last Friday’s strong jobs report. More interesting, however, will be if US inflation surprises to the upside again.
If this is the case, USD/CHF’s Friday bounce from below 0.9200 to 0.9250 could extend towards last week’s highs in the 0.9340 area. Remember that the weakness of the dollar in the first part of last week caused the pair to go back to 0.9180. Traders at the time said the move was “positioning related”. If that is the case, there could even be a move back towards 2021 H2 highs at 0.9360 on strong data.
Technical levels
Source: Fx Street
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