Published On: Wed, Feb 15th, 2017

USDCHF uptrend under way



The USD found a bid after FOMC Chair Janet Yellen presented her semi-annual Monetary Policy Report to Congress. She said, “incoming data suggest that labour market conditions continue to strengthen and inflation is moving up to 2%”. That’s as close to a Mission Accomplished assessment you are ever going to get out of the cautious Yellen. While she is always careful not to pre-judge the outcome of FOMC meetings (after all, she only has one vote), it seems clear that March 14-15 is “live” for a rate hike, especially as it coincides with the release of updated economic forecasts. However, market pricing suggests only a 30% chance of any move.

Today’s inflation update via the Consumer Price Index should further support the case that both headline and core inflation are settling around target. Also on the agenda are retail sales figures. On this Yellen said, “Consumer spending has continued to rise at a healthy pace”, so the market will expect the data to back this up.

If today’s data meets expectations, USD should get another boost, even though the bond market has been sluggish.

Management and risk description

From an Elliott Wave perspective I am interpreting USDCHF to have completed a medium-term reversal on the January 31 low of 0.9860 to now be undergoing a broad C-Wave advance onto new highs ahead (refer daily chart).

In the short term support lies around the 1.0040 level, 1.0010 max., to enable the resumption of uptrend towards my next short-term upside target at about 1.0165 (and eventually 1.0345+).


Entry: Today USDCHF is seen as a buy at market (1.0065) and again about 1.0040, if seen

(only until 1.0090 cleared). 

Stop: Just under 1.0010, initially. 

Target: 50% at 1.0157 and 50% at 1.0321.  

Time horizon: Allow several weeks for both targets to be met.

USDCHF daily chart (click to expand)

Source: ThomsonReuters 

USDCHF weekly chart (click to expand)

Source: ThomsonReuters. Create your own charts with SaxoTrader; click here to learn more

— Edited by Susan McDonald

Non-independent investment research disclaimer applies. Read more
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