Uncle Sam is ready to print the latest CPI report today!
Can USD/CHF resume its climb once the numbers are out?
As you can see from the hourly chart below, the pair recently busted through a short-term falling trend line. This means that the tide is turning in favor of dollar bulls, but it seems that a retest is taking place.
USD/CHF 1-hour Forex Chart by TV
The pair retreated upon testing the .9100 major psychological resistance, which happens to line up with R1 (.9110).
Price has since dipped to the 50% Fibonacci retracement level that coincides with the former trend line and today’s pivot point (.9040) to gather more bullish energy.
If this is enough to keep losses in check, USD/CHF could make its way back up to the swing high or even until R2 (.9180).
A stop loss below the 61.8% Fib at .9028 could get you out of a long position just in time before the pair sets its sights on the swing low right around S1 (.8970).
Technical indicators are looking mixed for now, as the 100 SMA is still below the 200 SMA while Stochastic is already indicating oversold conditions.
With that, the dollar might take cues from the May U.S. CPI release, which is slated to show another slowdown in inflation.
If the headline figure does fall from 4.9% to 4.1% year-over-year as number crunchers predict, then we might see another round of USD losses on account of weaker Fed rate hike hopes.
On the other hand, a strong reading might be enough to shore up tightening hopes for the June FOMC decision the very next day.
Keep in mind that the May NFP report once again beat estimates, giving the U.S. central bank room to tighten if needed.
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