USDCHF attempts a rebound

The long term bearish trend remains, but for how long?

Charts (2)

The US Dollar was bullish against most of its major pairs on Tuesday with the exception of the NZD and GBP. On the US economic data front, Markit's US Manufacturing Purchasing Managers' Index declined to 53.1 on month in the August final reading (53.6 expected), from 53.6 in the August preliminary reading. Construction Spending rose 0.1% on month in July (1.0% expected), from a revised -0.5% in June. 

On Wednesday, the Mortgage Bankers Association's Mortgage Applications data for the week ending August 28th is expected. Automatic Data Processing's Employment Change for August is expected to spike to 1,000K on month, from 167K in July. Factory Orders for July are expected to rise 6.1% on month, compared to +6.2% in June. Durable Goods Orders for the July final reading are expected to remain at 11.2% on month, in line with the July preliminary reading. Finally, the Federal Reserve's Beige Book is expected to be released.                     

The Euro was bearish against most of its major pairs with the exception of the CHF. In Europe, German Government has revised its 2020 GDP forecast to -5.8%, vs -6.3% previously. It also revised its 2021 GDP forecast to +4.4%, vs +5.2%. Research firm Markit has published final readings of August Manufacturing PMI for the Eurozone at 51.7 (as expected), for Germany at 52.2 (vs 53.0 expected), for France at 49.8 (vs 49.0 expected) and for the U.K. at 55.2 (vs 55.3 expected). The European Commission has posted August CPI at -0.2% (vs +0.2% on year expected) and July jobless rate at 7.9% (vs 8.0% expected). The German Federal Statistical Office has reported August jobless rate at 6.4%, as expected. The Bank of England has released the number of mortgage approvals for July at 66,300 (vs 55,500 expected).

The Australian dollar was bearish against most of its major pairs with the exception of the CAD, CHF and EUR. 

The FX pair with the largest move on Tuesday was the USD/CHF which jumped 58 pips to 0.9095 the day's range was 0.8999 - 0.9101. Looking at the chart, the longer term trend remains bearish. Today's action has helped identify a key support threshold at the $0.899 level. A break above key resistance at 0.9185 will have to be confirmed in order to play a rebound with a goal of breaking above the 50-day moving average. A new short signal would be confirmed with a break of 0.899 support.

Source: GAIN Capital, TradingView

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