USD/CHF recovers to 100/200-day EMA confluence with eyes on Swiss CPI

USD/CHF takes the bids to 0.9917 during the Asian session on Tuesday. The pair dropped the highest since September while testing an eight-day low during the previous day. Trade war risk and downbeat data from the United States (US), a contrast to the Swiss numbers, seem to be the main catalysts till now.

The US-led trade protectionism is back in focus as the Trump administration recently unveiled actions/statements to disappoint traders from South America, China and the European Union (EU). While the slump in local currencies compared to the US dollar (USD) was spotted as the reason for steel tariffs on Argentina and Brazil, the World Trade Organization’s verdict on Airbus helped the US to signal further tariffs on the EU automakers. Elsewhere, the US Trade Secretary Wilbur Ross kept the door open for December 15 tariffs on China if the phase-one trade deal doesn’t happen between now and then.

This dilutes the market’s risk tone and dragged Wall Street south whereas the US 10-year Treasury yields and S&P 500 Futures have recently followed the suit with mildly negative prints.

On the economic calendar, the US ISM Purchasing Managers’ Index (PMI) came in below 50.00 for the fourth consecutive month while second-tier activity and retail sales data from Switzerland grew beyond marked consensus.

It’s worth mentioning that the US President Donald Trump’s push for easy money policy seems to be largely ignored as the US Federal Reserve (Fed) policymakers are on the blackout period.

Looking forward, Swiss Consumer Price Index (CPI) data for November, expected -0.1% for both MoM and YoY versus -0.3% and -0.2% respective priors, seems to be the immediate catalyst. Though, trade/political headlines’ ability to trigger broad moves can’t be undermined.

Technical Analysis

Should prices manage to bounce back beyond 0.9918/20 region including 100 and 200-day Exponential Moving Averages (EMAs), November 26 low near 0.9955 and an early-November high near 0.9980 will return to the charts. Alternatively, an upward sloping trend line since October 18, at 0.9883, offers strong downside support.