USD/CHF Daily Signals – December 21, 2017

Dollar finds support area

After the tax reduction, President Donald Trump ran a victory as he scored his biggest political achievement yesterday. He also commended AT&T for offering tax bonuses to labors.

As the US 10-year yields are trading at a nine month high aftermath the tax reform, the primary focus was the US yield curve which continued to steepen. The US data suggests that bond markets will count on some level of financial boost which could accelerate the low inflation with the combination of expected economic positivity and robust.

Last month’s rapid unwinding popular yield curve flatteners as the growth optimism seems to be finally kicking in and focus returns to all things inflationary. As its difficult for the price this move in as the tax bill passage has come with no unexpected developments.

The Friday’s PCE statement will warrant attention and could turn to be the primary dollar event of the week soon after the tax reform bounce failed to explode a stronger dollar response. The low-key inflation analysis has been restricting interest rate expectation and an unlikely execution could obtain a significant reaction as the dollar short bets push for the exits. Following the dovish Fed hike, the further cut may not consider the dollar negative as the market has tightly positioned the USD negativity.

Intraday bias in the USD/CHF pair remains bullish for the moment with support level intact. As long as the 0.9854 support level holds, the pair’s near term outlook stays bullish and a further rise is expected. The price actions from the 0.9854 level are viewed as a consolidation pattern towards an upward bias. A retest of 100EMA is expected later with price action bouncing of these levels and indicates reversal. The pair is trading at the bottom of support levels and we can see the rebound on the pair stronger showing a sign of medium term bullish movement to upward bias. This will target projection of the 0.9876 levels and break here later test levels of the 0.9912 level. Hence, we’d be expecting resumption of larger up trend from current resistance-turned-support levels. However, the pair breaking at the support area at the 0.9854 level will dampen our bullish perspective on the pair and will test levels of the 0.9819 levels.


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