If you’ve only started trading this month, you should know that the U.S. dollar has been dominating its major counterparts as the markets price in the Fed possibly raising its interest rates at least one more time before the year ends.
That’s more hawkish than other major central banks who only keep the option on their tables!
Meanwhile, okay(ish) U.S. economic data releases are all but giving the Fed members permission to maintain their hawkish biases.
USD/CHF: 1-hour
The U.S. dollar has made ridiculous pips against its other major counterparts though it has struggled to replicate sharp gains against fellow safe haven Swiss franc.
….until today. Maybe.
Data printed earlier showed Switzerland’s consumer prices decreasing by 0.1% from August to September following a 0.2% uptick in the previous month. Analysts had also predicted that prices would steady in September.
The lack of inflationary pressure may give the Swiss National Bank (SNB) an excuse to not be as hawkish as the Fed.
This is probably why USD/CHF is breaking above a trend line resistance in the 1-hour time frame. As you can see, the trend line also marks the top of a bullish pennant-type consolidation.
An upside breakout could push USD/CHF by as far as the height of its 125-pip consolidation. We could see a move to the R2 (.9310) Pivot Point level in a confirmed breakout!
USD bulls who are confident that USD/CHF can sustain its bullish pressure can buy at current levels and aim for the .9230 zone for a short-term trade or the .9310 – .9325 zone for a good risk ratio. Just make sure that the pair is comfortably trading above its trend line resistance and that there’s sustained bullish momentum!
If you’re not sure about USD gaining even more pips on CHF, then you can also wait for a possible break and retest situation. A pullback may not be guaranteed but at least there’s a higher chance of follow-through.
However you choose to trade this setup, make sure you’re placing stop losses and applying your best risk management techniques so you can continue to trade for another day!
