Yesterday, the USDCHF was trending lower, with the pair down by 1.82% for the week, marking its most significant decline since November 7. Examining the hourly chart, the price had fallen below a downward-sloping trendline, and suggestively, the price needed to rise above that trendline at a minimum.
Fast forward to today’s trading, the price initially dipped lower during the Asian and early European sessions but reversed course as the US dollar strengthened following hawkish comments from Fed’s Waller and a jump in the University of Michigan’s 1-year inflation expectations to 4.6% from 3.8% last month. Technically, the trendline was broken near 0.8911, completing the first step. The next step was to reach and surpass the 38.2% retracement level.
The 38.2% retracement of the week’s trading range remains a minimum target to reach and break. Above that, the subsequent target is the 100-hour moving average at 0.89827, followed by the 50% retracement of the same downward move at 0.89894. Fail to do that, and the correction is plain, which could lead sellers to re-enter.